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Sell-off in US financials pulls down Asian markets

Wednesday 03:00 BST

What you need to know

  • Financial stocks slide in Tokyo and Sydney
  • Gasoline drops 1.7 per cent as US refiners resume operations
  • Australian 10-year government bond yield drops 7bp on GDP data, dovish Fed

Overview

Equity indices fell in Asia-Pacific trading as financial stocks in the region tracked declines in the US, while gasoline and oil prices slid further as refineries in the US continued to come back online.

Hot topic

Currencies were stabilising after a drop in the US dollar. The dollar index, which tracks the greenback against a basket of peers, was flat at 92.256 after a drop of 0.4 per cent overnight on dovish comments from US Federal Reserve officials.

The Australian dollar was level at $0.7994 following the release of figures showing gross domestic product rose 0.8 per cent in the second quarter, coming in just below expectations.

The Japanese yen firmed 0.1 per cent to ¥108.71 per dollar after strengthening past the ¥109 mark overnight. The gains came as nervousness about the latest nuclear weapons test by North Korea bolstered the appeal of the haven currency.

Australian government bonds were benefiting from the stock market’s troubles and dovish sentiment from the Fed. The yield, which moves in the opposite direction to price, on the 10-year note fell 7 basis points to 2.597 per cent.

The 10-year US Treasuries yield was up 1 bp at 2.068 per cent after a sell-off on Wall Street for financials and tech stocks sent the yield to its lowest level of 2017. The yield on the equivalent Japanese government bond was down 1 bp at 0.012 per cent.

Equities

Currency moves were felt most keenly in Sydney and Tokyo share markets. Australia’s benchmark S&P/ASX 200 index was down 0.4 per cent as financials dropped 1.4 per cent. In Tokyo the Topix was off 0.3 per cent as financial stocks fell 1.3 per cent.

Hong Kong’s Hang Seng Index was down 1 per cent with financials off 1.3 per cent.

Commodities

Gasoline prices continued to fall as more US refiners came back online in the wake of tropical storm Harvey. US gasoline futures were down 1.7 per cent in Asia trading at $1.6817 a gallon.

Crude oil was down as well, with global benchmark Brent off 0.5 per cent at $53.12 a barrel. WTI, the US marker, was down 0.2 per cent at $48.56.

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