Read for 4 minutes SYDNEY, Australia (Reuters) – On Wednesday, Asian stock markets fell as a bout of risk aversion lifted Treasuries and the dollar, while investors awaited minutes from the Federal Reserve’s most recent meeting, which are expected to highlight a hawkish shift in US monetary policy. FILE PHOTO: At the Colombo Stock Exchange on February 6, 2014, a broker stands near a computer screen showing stock market moves since the morning opening. REUTERS/File Photo/Dinuka Liyanawatte Dealers struggled to pinpoint a single cause for the abrupt shift in sentiment, although a Chinese crackdown on internet firms had clearly had an influence. Hong Kong stocks fell another 1% to hit six-month lows, while Didi Global Inc, a New York-listed ride-hailing business, fell more than 20%. Alibaba Group BABA.N., Baidu Inc., and JD.com also saw their stock prices drop. Outside of Japan, MSCI’s broadest index of Asia-Pacific equities down 0.4 percent, while Japan’s Nikkei fell 0.9 percent. In the other direction, Australian stocks gained 0.6 percent, while Chinese blue chips gained 0.2 percent. For the time being, Nasdaq futures and S&P 500 futures were both holding steady. A poll showing a little softening in the red-hot US services sector had disturbed Wall Street, while the ISM index was still historically high at 60.1. “Normally, any ISM rating of 60 or more would be considered robust,” said Rodrigo Catril, a senior FX strategist at NAB. “However, details point to a speed limit to the recovery due to a lack of inputs and labor, as well as still high costs.” The jittery attitude aided Treasuries’ recent gain, with 10-year Treasury rates falling nearly 8 basis points overnight to 1.348 percent. That was the lowest level since February, as well as the greatest daily drop since then. The yield curve bull flattened as longer-dated paper outperformed, which could be a bet that the Fed will tighten policy ahead of schedule to avoid inflation. The minutes of the Fed’s June policy meeting, which are expected later on Wednesday, may reveal how serious members were about tapering their asset purchases and how soon hikes could start. The dollar rose to 92.543 versus a basket of currencies, up from a low of 92.003 on Tuesday, on expectations of a hawkish tone. The euro fell to $1.1823, its lowest level since March, as commodity-linked currencies fell. The dollar struggled against the safe-haven yen, slipping to 110.45 yen. “In the coming quarters, we foresee broad USD strength,” said Kim Mundy, a senior currency analyst at CBA. “We have reduced our near-term estimates for all currencies we monitor against the USD because of our view of U.S. economic outperformance for a spell.” The rally in the dollar negated the broad risk-off sentiment in commodity markets, keeping gold flat at $1,801 an ounce after briefly reaching $1,814 overnight. Oil prices had lost some of their recent gains after OPEC producers called off a meeting because major parties couldn’t agree on how to raise supply. The lack of a deal on growing output, according to NatWest Markets analysts, is a plus for pricing in the short term but could be a liability in the long run. “A lack of consensus among large oil producers raises the danger that the entire OPEC+ accord collapses, forcing major oil producers to considerably increase production much more quickly,” they wrote in a note. Brent crude was down 18 cents to $74.35 a barrel early Wednesday, while U.S. crude was down 10 cents to $73.27. Sam Holmes did the editing./n
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