Asian stocks fell and cryptocurrencies extended their losses on Wednesday as inflation uncertainties prompted investors to reduce their exposure to riskier assets for now.
A new Chinese ban on financial institutions providing services related to cryptocurrency transactions has also weighed on digital coins.
The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.3% despite Hong Kong and South Korea being closed for holidays.
Mainland China’s CSI300 (.CSI300) lost 0.6% while Japan’s Nikkei (.N225) lost 1.1%.
Wall Street stocks slid late in the session to finish lower on Tuesday, unable to maintain gains made after windfall profits from Walmart (WMT.N) and Home Depot (HD.N).
The S&P 500 (.SPX) lost 0.85%, with telecoms stocks leading the decline, while the Nasdaq Composite (.IXIC) fell 0.56%.
“Now that investors are concerned about inflation, they are probably reluctant to make big decisions until they see a clearer picture,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
“Inflation fears will keep markets uncertain for now, although I don’t expect stock prices to collapse due to economic reopenings. “
The Federal Reserve has stuck to the rhetoric that a recent rise in inflation is transitory and therefore should maintain its comfortable monetary policy settings.
The minutes of the April Fed meeting, to be released on Wednesday evening, should repeat this message.
“Inflation remains the main theme, whether it is real and the Fed has to change its policy because of it,” said Kazushige Kaida, head of currency sales at the Tokyo branch of the State Street Bank. “Right now, the markets are sort of trusting the Fed’s story. “
Yet an unexpected pick-up in consumer inflation and signs of a labor shortage in the United States prompted investors to shed assets that had risen sharply over the past year.
Cryptocurrencies are one of those extreme cases.
Bitcoin fell 5.3% to its lowest level since early February and last stood at $ 40,973, after losing more than a third of its value from a high of $ 64,895 reached there a little over a month ago.
Ether, the second largest cryptocurrency, changed hands at $ 3,199, down more than 25% from its record high reached last Wednesday.
While cryptocurrencies were battered by China’s new trading ban, they weren’t the only ones facing pressure. Read more
Some commodities that benefited from trade reflation also lost strength, with US lumber futures down nearly 25% in the past three sessions.
Oil prices also retreated after media reports that the United States and Iran made progress in reviving an agreement limiting the development of nuclear weapons by the OPEC country, a development that could lead to an increase in supply from Iran.
US crude futures fell 0.9% to $ 64.9 per barrel while Brent futures fell 0.9% to $ 68.12 per barrel.
This helped to slightly ease inflation fears in the bond market.
US 10-year inflation valued in US bond markets, based on the yield spread between inflation-protected bonds and conventional bonds, fell to 2.55% from an eight-year high in d ‘about 2.58% reached earlier this month.
The yield on 10-year US Treasuries, or the nominal yield, was little changed at 1.664%.
In the currency market, the dollar remained under pressure while US rates remained stable.
The euro hit a nearly three-month high of $ 1.2234 and last traded at $ 1.2223 while the British pound also hit a high last seen in late February and has changed hands at $ 1.4191.
The dollar settled at 108.92 yen after four consecutive sessions of decline.
Precious metals were strong, with gold reaching its highest level since late January and last trading at $ 1,870 an ounce.
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