Asian shares experienced a decline on Wednesday as the growth rate of China’s services industry slowed, exacerbating concerns about the sluggish recovery in the world’s second-largest economy raising concerns about the pace of economic recovery in the country.
The weakness in Chinese equities and the reversal of gains in the offshore yuan reflect investor apprehension. Geopolitical tensions and the deceleration of growth momentum have contributed to market uncertainty. The fluctuating market conditions are further compounded by specific factors impacting individual stocks, such as Rakuten Group Inc.’s debt level concerns.
A regionwide gauge of equities dropped by 0.5%, with stocks also falling in Japan, South Korea, and Australia. Futures for benchmarks in the US and Europe also edged lower. Initial losses in Chinese equities deepened, and the offshore yuan reversed its earlier gains following the release of the weaker-than-expected Caixin China services purchasing managers’ index. Despite the central bank’s efforts to maintain support for the currency in its daily fix, the yuan declined.
The disappointing services growth in China has refocused attention on the decelerating momentum of economic expansion and heightened geopolitical concerns. Charu Chanana, a market strategist at Saxo Capital Markets, highlighted these factors as contributors to the market’s apprehension. In Japan, Rakuten Group Inc. shares fell after news broke that the e-commerce company had taken a step toward listing its online brokerage arm. The stock initially dropped as much as 2.9% due to concerns about the company’s debt levels but later recovered to enter positive territory.
As trading resumed on Wednesday following the Independence Day holiday in the US, the yield on the two-year Treasury fell by around four basis points to 4.9%. The 10-year yield, on the other hand, hovered around 3.84%.- Source: Bloomberg
