Asian stocks fell to the lowest this year, crude oil sank and the dollar rallied on a weakening global growth outlook and the prospect of reduced Federal Reserve stimulus.
MSCI Inc.’s gauge of Asia-Pacific shares fell more than 1%, with Hong Kong equities leading the slide as Chinese technology stocks struggled, including a plunge in Alibaba Group Holding Ltd. to a record low. U.S. futures wavered after the S&P 500 and Nasdaq 100 retreated overnight.
Stocks are under pressure after the latest minutes showed most Fed officials agreed they could start slowing the pace of bond purchases later this year given the progress made toward inflation and employment goals.
A gauge of the dollar touched the highest since November 2020 and China’s yuan advanced to its strongest level in more than five years against a basket of trading-partner currencies. Treasuries were little changed. Commodities like oil, copper and iron ore slumped, highlighting demand risks from the resurgence in Covid-19. Commodity-linked currencies including the New Zealand and Australian dollars dipped.
S&P 500 Index went into correction every time its value had doubled
The global equity rally has paused as investors consider the likely time-line for a reduction in the Fed’s massive bond purchases as well as the challenges for economic reopening from the fast-spreading delta coronavirus variant. The Jackson Hole symposium next week, the U.S. central bank’s most prominent conference, may provide further clues on the stimulus outlook.
“I don’t think anybody will be surprised if tapering starts at the end of this year,” Dana D’Auria, Envestnet co-chief investment officer, said on Bloomberg Television. She added that the pace of reopenings is a concern for investors amid the spread of the delta strain.
Elsewhere, Robinhood Markets Inc. warned that a revenue surge fueled by a boom in cryptocurrency trading might not last. Its shares sank in extended trading. Bitcoin fell below $45,000.
In the latest coronavirus developments, President Joe Biden beefed up the U.S. response to the delta strain, laying out steps including vaccination boosters.