Shares of Asia are hampered by trade fears, oil extends gains

SYDNEY (Reuters) – Asian stock markets were under pressure on Wednesday, as weak Chinese equities and the yuan weighed on investor sentiment, while the US lobbied its allies to quit. to buy Iranian crude.

The broadest index of MSCI's Asia-Pacific shares outside Japan has further lost 0.3% after hitting a two-year low on Tuesday.

China's blue chips slid 0.4% to above 13-month lows, as the settlement of Sino-US tensions remains a distant prospect.

The Japanese Nikkei was better behaved but quickly succumbed to risk aversion and fell by 0.5%.

The fragile mood eclipsed the gains in energy stocks made after the news broke that Washington has pushed allies to stop imports of Iranian crude oil.

US crude added 18 cents to $ 70.71, jumping 3.6% overnight, while Brent climbed 17 cents to $ 76.48 a barrel.

The rise in oil boosted the Wall Street energy sector by 1.4%, making it the biggest winner of the S & P 500.

But the S & P still managed to add only 0.22% in total, while the Dow rose 0.12% and the Nasdaq 0.39%.

Confusion remained the word of the American commercial policy.

The US House of Representatives on Tuesday passed a bill to tighten the rules on foreign investment, boosted by bipartisan concerns over Chinese bids to acquire sophisticated technology in the United States.

Yet President Donald Trump has also endorsed a measured approach to curtailing Chinese investment in US technology companies, saying that a stronger merger review panel could protect sensitive technologies.

"We remain of the opinion that a large-scale" trade war "remains a low probability, although the odds that it has seemed to have increased," said David Hensley, JPMorgan Economist.

He noted that the latest White House tariff threats would cover more than 30% of US imports, or nearly 5% of annual economic output (GDP).

"If all of this happens, and the US trading partners retaliate, it will result in a major supply shock for the global economy, which will increase inflation and reduce growth." .

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In foreign exchange markets, trade-sensitive currencies, including the Australian and New Zealand dollars, lost ground while the safe-haven yen found demand. The kiwi dollar hit a seven-month low of $ 0.6817.

The US dollar was broadly stable against a basket of currencies at 94.647, after jumping 94.171 on Tuesday. The euro had returned to $ 1.1650, after taking profits at a high of $ 1.1720 overnight.

Still, the dollar could not sustain gains on the yen and returned to 109.87 from a start 110.12.

The dollar was helped in part by recent gains on the Chinese yuan, which had stirred speculation that Beijing was weakening its currency to support exports.

The People's Bank of China (PBOC) set the midpoint of the yuan at a six-month low of 6.5569 per dollar on Wednesday. This was down 0.6 percent from the previous one, but actually a little stronger than market expectations.

However, the spot rate continued to plummet, with the yuan exceeding 6.6600 per dollar for the first time since December.

In the commodities markets, gold was apparently no longer considered a safe haven by investors and reached its lowest level in more than six months.

Spot gold was $ 1,254.66, its lowest since mid-December at $ 1,253.50.