Asian stocks went down because investors were worried about China reopening.
Asian stocks went up and down in choppy trading on Wednesday as investors tried to figure out what to do after China took more steps toward reopening its COVID-damaged economy. Worries about an economic slowdown weighed on investors’ moods.
MSCI’s broadest index of Asia-Pacific shares outside of Japan went down as much as 0.5% but was up 0.12%. In November, the index had its best monthly performance in almost 30 years. With two trading days left in December, the index is flat.
Futures for European stocks showed that the stocks were going to go down. The Eurostoxx 50 futures were down 0.13 percent, the German DAX futures were down 0.05 percent, and the FTSE futures were up 0.24 percent.
Related: Asian stocks go down because people think the Fed will have to keep being tough.
The China stock market didn’t change much, but the Hong Kong stock market went up 2% after China said on Monday that it would stop making travellers who come into the country go into quarantine starting on January 8.
Since the peak of infections happened faster than expected, investors are hopeful that the economy will get better quickly. However, the rising number of cases, which is straining resources and putting pressure on hospitals, has kept investors from getting too excited.
Wall Street fell overnight as U.S. Treasury yields put pressure on growth stocks that are sensitive to interest rates.
Investors have been trying to figure out how high the Federal Reserve will have to raise interest rates as it tightens policy to fight inflation and keep the economy from falling into a recession.
The yield on 10-year Treasury notes went down by 1.1 basis points to 3.847%, which is close to the five-week high of 3.862% that it reached in the previous session.
The yield on a 30-year Treasury bond went down by 2.9 basis points to 3.914%, and the yield on a two-year U.S. Treasury bond, which usually moves along with expectations for interest rates, went down by 1.7 basis points to 4.351%.
At the same time, policymakers at the Bank of Japan (BOJ) talked about how there are more and more signs that higher wages could finally end the risk of a return to deflation, according to a summary of opinions from a meeting in December that was released on Wednesday.
At its meeting on December 19 and 20, the BOJ kept its ultra-easy policy but shocked the markets by changing its policy on controlling bond yields. This made long-term interest rates rise even more.
Even though the markets are becoming more certain that the Japanese central bank will change its policy, investors are likely to focus on who will lead the BOJ after Governor Haruhiko Kuroda leaves in April.
“We think the policy review will happen in the second quarter of 2023 after the new governor is chosen,” ING economist Min Joo Kang said. She said that the policy for controlling the yield curve could be changed again in the first half of 2023 and that ING expected a rate hike in late 2023 or early 2024.
“The most important thing to keep an eye on for the Bank of Japan is the spring salary negotiation next year.”
Related: The Nikkei falls more as Asian stocks react to a change in BOJ policy.
The S&P/ASX 200 index in Australia went down by 0.45%, while the Nikkei in Japan went down by 0.6%.
On the currency market, the Japanese yen fell 0.39 percent against the dollar to 134.00 yen per dollar, while the euro rose 0.01 percent to $1.0639.
The dollar index, which compares the safe-haven dollar to six of the world’s most important currencies, went up by 0.38 percent.
U.S. crude went up 0.1% to $79.61 per barrel, and Brent went up 0.1% to $84.42 per barrel.