Asian shares reversed their earlier gains on Wednesday as investors
dumped U.S. stock futures for safer harbours, a sign market participants
remain jittery after this week’s global markets rout.
While most analysts believed this week’s distressed selling looks to have run its course for the moment, allowing volatility to abate a little, the prospect of monetary tightening across the globe remains a challenge for the long term.
Investors took their cues from a late rebound on Wall Street overnight, though many had an anxious eye on E-Mini futures for the S&P 500 which slipped about 1 percent in late Asian trading. Dow Minis were down 0.9 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan was a tad softer, having risen as much as 2 percent in early trade.
Japan’s Nikkei eased too but was still up 0.2 percent. Chinese blue chips and South Korea’s KOSPI index dropped more than 2 percent.
Hong Kong, Singapore and Indian stock markets were also in the red.
Bonds had started to see some buying again, a hint that risk appetite might be waning, which could trigger another spasm of stock selling.
U.S. 10-year yields nudged lower to 2.76 percent, after going as high as 2.80 percent earlier in the day.
Many of these were algorithmic funds crowded into similar trades - long stocks and short volatility. The selling then cascaded through their computer systems in a way almost beyond human intervention.
The pivotal gauge of S&P 500 volatility, the VIX, did come off almost 20 points overnight but was still relatively elevated at 29.98 percent.
In currencies, investors found safe harbour in the Japanese yen while riskier plays such as the Australian and New Zealand dollars declined.
The U.S. dollar fell 0.3 percent to 109.23 yen, still above Tuesday’s trough of 108.43.
The euro was a touch firmer at $1.2390, while the dollar was barely changed against a basket of currencies to 89.556.
Gold, another supposed safe haven, advanced 0.4 percent to $1,330.22 an ounce after touching a three-week low at $1,319.96.
Oil prices were strong too, with U.S. crude for April adding 51 cents to $63.89. Brent crude futures gained 59 cents to $67.45 a barrel.
While most analysts believed this week’s distressed selling looks to have run its course for the moment, allowing volatility to abate a little, the prospect of monetary tightening across the globe remains a challenge for the long term.
Investors took their cues from a late rebound on Wall Street overnight, though many had an anxious eye on E-Mini futures for the S&P 500 which slipped about 1 percent in late Asian trading. Dow Minis were down 0.9 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan was a tad softer, having risen as much as 2 percent in early trade.
Japan’s Nikkei eased too but was still up 0.2 percent. Chinese blue chips and South Korea’s KOSPI index dropped more than 2 percent.
Hong Kong, Singapore and Indian stock markets were also in the red.
Bonds had started to see some buying again, a hint that risk appetite might be waning, which could trigger another spasm of stock selling.
U.S. 10-year yields nudged lower to 2.76 percent, after going as high as 2.80 percent earlier in the day.
It was a steep spike in yields last Friday that sparked the initial rout on Wall Street, forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.
Many of these were algorithmic funds crowded into similar trades - long stocks and short volatility. The selling then cascaded through their computer systems in a way almost beyond human intervention.
The pivotal gauge of S&P 500 volatility, the VIX, did come off almost 20 points overnight but was still relatively elevated at 29.98 percent.
In currencies, investors found safe harbour in the Japanese yen while riskier plays such as the Australian and New Zealand dollars declined.
The U.S. dollar fell 0.3 percent to 109.23 yen, still above Tuesday’s trough of 108.43.
The euro was a touch firmer at $1.2390, while the dollar was barely changed against a basket of currencies to 89.556.
Gold, another supposed safe haven, advanced 0.4 percent to $1,330.22 an ounce after touching a three-week low at $1,319.96.
Oil prices were strong too, with U.S. crude for April adding 51 cents to $63.89. Brent crude futures gained 59 cents to $67.45 a barrel.
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