SINGAPORE — Greater China stock indices dragged losses as Covid concerns resurface, while Asia-Pacific markets traded lower on Wednesday. Oil futures rose after plunging overnight.
Hong Kong’s Hang Seng index fell 1.37%, with heavyweights HSBC and CNOOC falling 3.93% and 5.58% respectively.
Mainland China markets also declined. The Shanghai Composite lost 1.34% and the Shenzhen Component lost 1.08%.
“New rounds of Covid testing in Shanghai have heightened fears of further lockdowns for China, which would have a ripple effect in other markets,” said a note from ANZ Research dated Wednesday.
Shanghai will conduct mass testing in several districts after Covid cases were detected earlier this week, according to a statement on the city’s WeChat account.
Some 11 cities across China were restricting local travel on Monday, up from five cities a week earlier, according to Ting Lu, chief China economist at Nomura.
Japan’s Nikkei 225 fell about 1% and the Topix index 1.3%.
In South Korea, the Kospi fell 1.13%, but the Kosdaq gained 0.51%.
The S&P/ASX 200 in Australia was down 0.34%.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.78%.
US stock indices first fell sharply on Tuesday in the United States before recovering in the afternoon. The Nasdaq Composite ended the session up 1.75% at 11,322.24, while the S&P 500 was up 0.16% at 3,831.39.
The Dow Jones Industrial Average lost 129.44 points, or 0.4%.
There is no doubt that the recession is the biggest problem facing the markets right now.
Senior Strategist, Goldman Sachs
The 10-year US Treasury yield and the 2-year yield reversed on Tuesday in the United States, a closely watched measure that signals a recession. Longer duration yields are generally higher than shorter duration yields. But the 2-year yield was last at 2.8426, above the 10-year yield of 2.8364.
“There is no doubt that the recession is the biggest problem facing the markets right now, both the equity, fixed income and frankly commodity markets,” said Ben Snider, senior strategist at Goldman Sachs, at CNBC’s “Squawk Box Asia.”
In central bank news, Bank Negara Malaysia is expected to issue its monetary policy statement today. Analysts polled by Reuters expect the bank to raise rates by 25 basis points.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 106.497, jumping from below 105.3 earlier this week.
The Japanese yen was trading at 135.47 to the dollar, strengthening more than 136 against the greenback on Tuesday. The Australian dollar was at $0.6796 after falling against the stronger US dollar.
“The deterioration in the global economy is the main drag on the AUD,” Kristina Clifton, an economist at Commonwealth Bank of Australia, wrote in a note on Wednesday.
In morning trade in Asia, oil futures pared gains but were still trading higher. West Texas Intermediate Crude rose 0.5% to $100. Brent crude rose 1.13% to $103.93.
The benchmark U.S. oil plunged as much as 10%, breaking the $100 level on Tuesday in the United States before settling down 8.24% at $99.50 on recession fears.
International benchmark Brent crude stood 9.45%, or $10.73, down to $102.77 a barrel.
– CNBC’s Evelyn Cheng contributed to this report.