Global equities and the price of gold fell as hopes dimmed for drastic new measures to support the recovery of the U.S. economy from the coronavirus pandemic.
China’s CSI 300 index of Shanghai and Shenzhen-listed stocks rose 2.6 percent on Wednesday while Hong Kong’s Hang Seng slipped 0.2 percent. Australia’s S & P / ASX 200 fell 0.5 per cent.
The decline came after Mitch McConnell, the Republican leader in the US Senate, said on Tuesday that there had been no talks since Friday about a new economic stimulus package. His remarks caused a late downswing on Wall Street, where the S&P 500 ended the day with 0.8 percent.
Chinese stocks were also pressured by data showing domestic bank lending fell more than analysts predicted in July. That meant that tighter liquidity could throw a rally into the CSI 300, which is up nearly 12 percent this year.
Ken Cheung, a strategist at Mizuho Bank, said the credit figures indicated a “less foolish attitude” on the part of China’s central bank, adding that a “lack of further reduction measures could lead to China shares”.
Futures markets tipped U.S. stocks to rise slightly when Wall Street opened, with the S&P 500 expected to gain 0.1 percent. London’s FTSE 100 was set to open flat.
Gold fell 2 percent on Wednesday in Asia to $ 1,872.90 per troy ounce, adding to a fall of 5.7 percent on Tuesday – its worst one-time decline since 2013 – that brought the price back below $ 2,000.
The precious metal has risen sharply to highs in recent weeks, as expectations of central bank stimulus have encouraged a flight to ports that may be less affected by higher inflation. But as Washington deviates from further steps toward economic support, investors can reassess their impact.
“The move in gold was all about a move in anticipation of inflation,” said Daniel Been, head of foreign exchange strategy at ANZ.
However, he said he expects gold to return to the climb, given the extent of global central bank lending intended to kiss the blow of Covid-19.
In New Zealand, the S & P / NZX 50 index fell 1.5 percent on Wednesday as authorities put the city of Auckland back in strict lockdown in response to the first locally purchased cases of Covid-19 in more than 100 days. Authorities are investigating whether the outbreak was linked to infected coal freight imports.
The U.S. dollar, measured against a rate of its peers, grew 0.3 percent. The Japanese benchmark Topix stock index rose 1.4 per cent as the yen weakened 0.3 per cent to 106.77 dollars per dollar.
Yields on 10-year U.S. Treasuries, which rose 0.07 percentage points on Tuesday, added another 0.01 percentage point to 0.651 per cent. Bond prices fall as yields increase.
Additional reporting by Daniel Shane in Hong Kong
