Asian shares sank on Wednesday and bonds rallied

Asian shares sank on Wednesday and bonds rallied as investor sentiment soured over growing worries about world growth with trade tensions between Washington and Beijing showing no signs of easing.

In Asia, focus remains on the ongoing Sino-U.S. trade war. U.S. President Donald Trump said on Monday that Washington was not ready to make a deal with China yet. At the same time, he pressed Japan to reduce its trade imbalance with the United States.

Such concerns have led U.S. 10-year yields to fall about 10 basis points below the 3-month rates, an inversion typically seen as a leading indicator of a recession. German Bund yields are also on a slippery slope.

Asian Shares

  • MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5% .
  • Chinese shares started on the back foot with the blue-chip CSI300 off 0.5%.
  • Australian shares were 0.8% lower while Japan’s Nikkei faltered.
  • In an indication U.S. markets will fall again on Wednesday, E-Minis for the S&P 500 were 0.4% lower.

Currency

In currencies, activity was muted.

  • The dollar index was flat at 97.937, well above a recent two-week trough of 97.547.
  • The euro was also unchanged at $.1.1162 after two straight days of falls while the British pound held at $1.2656.

Commodities

  • In commodity markets, oil prices were subdued on Wednesday as worries the Sino-U.S. trade war could trigger a global economic downturn dominated, despite the risk of supply shortfall from U.S. floods and political tensions in the Middle East.
  • Brent crude was last off 45 cents at $69.66 per barrel.
  • U.S. crude eased 58 cents to $58.56 per barrel.

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