Asian stocks plummet to 7-month lows due to new crash due to increased regulation of China's tech sector, but currencies are stable and dollar remains at its peaks
Asian stocks fell to a new seven-month low on Tuesday in a third consecutive session of strong selling from Chinese internet giants, while bond and currency markets traded tightly ahead of the Federal Reserve Board meeting.
MSCI, the broadest Asia-Pacific stock index outside Japan, fell 0.97% to its lowest level since December, down 2.45% the day before.
The Hong Kong Index fell 2.84% on Tuesday for its third day of decline, with the Hang Seng Tech Index falling 6.46% to its lowest level since its inception in July 2020. It fell about 14% in three days and lost 41% from last year's peak.
The biggest losers were Meituan and Alibaba, which fell 12.7% and 5.5%, respectively. Both companies are shut down for the third day in a row as investors expect food delivery companies to be affected by new rules guaranteeing workers pay in excess of the minimum wage.
In continental markets, Chinese blue chips fell sharply in daytime trading, shedding 2.93% after Monday's close to their lowest level since December, thanks to regulatory measures in the education and real estate sectors.
“The market does not seem to be sure if there will be additional policy changes for the fintech sector, social media platforms, delivery platforms and passenger calling platforms,” said Iris Pang, chief economist for Greater China at ING.
“Each sector has its own problem and different regulatory measures, so the market is looking for 'which technology subsector will be next?'
Elsewhere in Asia, investors were more optimistic, with Japan's Nikkei up 0.49% and Australian shares closing 0.46%.
Other markets opened lower with S&P 500 futures down 0.21%, Euro STOXX 50 futures down 0.09% and FTSE futures down 0.19%.
US corporate earnings and the Fed's monetary policy meeting also worried investors.
“This is profit and the Fed. The next few days will be huge as everyone will try to figure out how strong the corporate fundamentals are at the moment and in what context it is happening in terms of economic outlook and political attitudes, ”said Kyle Rodda, IG market analyst. Markets.
Alphabet Inc, Apple Inc and Microsoft Corp are set to release quarterly results late Tuesday, while Amazon.com Inc is set to release later this week.
In addition, the Fed will begin its two-day meeting on Tuesday, and investors intend to carefully study the statement and the results of the press conference by Chairman Jerome Powell, which is scheduled for Wednesday evening.
They will oversee how the central bank balances rapidly rising prices with the complication of rising coronavirus infections.
All three major US stock indexes closed at record highs for the second straight session on Monday.
However, the looming Fed meeting held back major moves in other asset classes.
The dollar hovered around its recent peak in Asian hours, the Australian dollar weakened and the pound rallied amid fears of a worsening COVID-19 situation in Sydney compared to a decline in new daily infections in the UK.
US Treasury yields fluctuated in a range in Asian trading on Tuesday after a turbulent Monday, but remained largely unchanged by the end of the day.
The benchmark 10-year Treasury yield last yielded 1.2795% versus the US close of 1.276%, and the 2-year bond yield was 0.2134% versus the US close of 0.196%.
Gold fell in price: the spot price was $1,794.5 an ounce, while American oil rose 0.31% to $72.13 a barrel.
Bitcoin fell to about $37,000 from Monday's peak of $40,581 after Amazon.com officially denied news over the weekend that the company was preparing to start accepting cryptocurrency.
