Asian stocks lose gains as concerns about China grow By Reuters

By Alun John and Chris Prentice

HONG KONG / WASHINGTON (Reuters) – Asian stocks reversed their previous gains on Tuesday, weighed down by Chinese markets as investors took profits in a recent rally in some mainland companies, although fears of the mainland waned. inflation has helped to strengthen general sentiment in the region.

Investors are now awaiting an appearance in Congress closely watched by US Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen later today.

The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.57%, penalized by a 1.5% drop in Chinese blue chips.

Gary Ng, an economist at Natixis, said Chinese stocks had recently outpaced other Asian markets, which meant they had to undergo some sort of correction.

Announcements of new sanctions overnight also did not help Chinese stocks, although analysts said markets had become quite used to such developments.

The United States and other countries, including the European Union, sanctioned Chinese officials for human rights abuses in Xinjiang on Monday, and Beijing retaliated with punitive measures against lawmakers, diplomats, institutes and European families.

Jin Jing, analyst at China Fortune Securities, said the sanctions hurt risk appetite, especially for foreign investors, who have sold shares through Stock Connect.

Persistent fears of tightening domestic policies also continued to weigh on high-flight sectors and high-valued stocks as investors became cautious.

Beyond China, Asian stocks were mixed after the Wall Street gains on Monday, as investors applauded a pause in the recent surge in bond yields.

The rise of 0.32%, the rise of 0.70% and the rise of 1.23%.

Developed markets and emerging Asia have also managed to digest a surprise decision by the Turkish president to replace the central bank governor with a criticism of high interest rates.

“It doesn’t look like you’re going to see a lot of contagion from Turkey,” said Alex Wolf, head of investment strategy for Asia at JP Morgan Private Bank, citing “fairly strong flows to Asia” .

“Investors see emerging markets less as a giant bloc.”

10-year benchmarks edged up slightly, most recently at 1.6857%, but down from 1.732% on Friday night.

“Risky US assets were helped by lower Treasury yields to start the week. Yield movements will continue to be watched closely this week amid a series of US Treasury auctions and testimony from the Secretary to Treasury Yellen and Fed Chairman Powell, ”ANZ Research said in a daily note.

Fed Chairman Powell said in remarks prepared for a congressional hearing on Tuesday that the US recovery had progressed “faster than expected and appears to be strengthening.”

The dollar index against a basket of six major currencies was almost flat at the start of Asian trade at 91.853, after slipping 0.32% on Monday.

But oil has fallen amid plentiful supply and fears that further brakes on the pandemic and slow vaccine deployments in Europe are slowing the recovery in fuel demand.

US West Texas Intermediate Futures fell 1.28% and futures contracts fell 1.27%.