Asian stocks decline as growth risks and safe-haven demand increase

Asian markets declined on Monday, retreating from more than three-week highs as investors’ appetite for risk was dampened by concerns about a global economic slowdown.

Bond yields decreased as speculation increased that a US recession would halt the Federal Reserve’s aggressive tightening programme. Markets were watching the Federal Open Market Committee meeting, which starts on Tuesday, for policy hints.

The desire for the US currency as a safe haven helped the dollar maintain its gains against key peers after falling to a 2 1/2-week low.

“Risk markets are obviously priced for some kind of slowdown, but are they priced for an outright recession? I would argue no,” said Ray Attrill, head of currency strategy at National Australia Bank.

“In that sense, it’s hard to say we’ve reached a bottom as far as risk sentiment is concerned” he added.

Chinese blue chips down 0.13 percent, while Japan’s Nikkei fell 0.75 percent.

The tech index of Hong Kong’s Hang Seng fell 1.51 percent, while the overall index fell 0.45 percent.

After reaching its highest level since June 29 on Friday at 160.03, MSCI’s largest index of Asia-Pacific equities fell 0.62 percent to 158.68.

The US S&P 500 emini futures fell 0.9%, indicating that the benchmark’s 0.93 percent down on Friday, when a survey revealed that corporate activity had decreased for the first time in over two years amid persistently high inflation and swiftly rising interest rates.

Data from earlier that day also revealed an unexpected decline in euro zone economic activity.

The tech-heavy stock index Nasdaq fell 1.77 percent, while Nasdaq futures eased 0.04 percent after the bottom fell out of Snap Inc. after the company that owns Snapchat reported its weakest-ever sales growth.

This week, investors are keeping a close eye on how a strong dollar could affect the financial results from industry giants like Apple and Microsoft, among others.

The dollar index, which compares the safe-haven currency to six other important currencies, increased by 0.1 percent to 106.81, moving up from a 2 1/2-week low of 106.10 set on Friday.

While the euro fell 0.24 percent to $1.01875, the dollar increased by 0.29 percent to 136.485 yen.

After falling from a high of 3.083 percent over the previous two sessions, the yield on the 10-year US Treasury was little changed at 2.79 percent.

Australian government bond yields also decreased to their lowest level since May 31 at 3.285 percent, while equivalent Japanese government bond yields fell to their lowest level since March 14 at 0.19 percent.

On Wednesday, the Fed will wrap up a two-day meeting, and the markets are pricing in a 75 basis-point rate hike, with a 9% probability of a full percentage point increase.

Brent crude increased 0.15 percent, or 15 US cents, to $103.35 a barrel in the commodities market. At $94.75, Nymex light crude was little higher.

Gold slipped 0.14 per cent to $1,724.05 per ounce.