Beijing threatened repercussions in the event of the visit by Pelosi to the island
Wall Street stocks finished lower on Monday to snap a three-day winning streak, with the energy sector leading losses as oil prices dropped. The S&P 500 fell 0.28% the Nasdaq Composite lost 0.18% and the Dow Jones Industrial Average shed 0.14%. On the data front, US ISM Manufacturing PMI edged slightly lower in July. The index declined to 52.8 from 53 in June. This was the lowest reading in two years but it was better than the market expectation of 52. According to the details of the report, employment Index contracted for a third straight month at 49.9%, new orders dropped to 48 while inventories edged higher to 57.3.
Asian equities slid on Tuesday amid escalation in US-China tensions as US House of Representatives Speaker Nancy Pelosi set to begin a trip to Taiwan. In turn, Beijing threatened repercussions in the event of the visit by Pelosi to the island. Against this backdrop, MSCI’s broadest index of Asia-Pacific shares retreated 1.33% while China’s Shanghai Composite plunged 2.26%. Japan’s Nikkei 225 down 1.42% and Hong Kong’s Hang Seng gave up nearly 1.5%. Elsewhere, the RBA bank delivered a 50-bps rate hike as expected. After an early dip, the S&P/ASX 200 index erased losses to finish fractionally higher.
In Europe, stocks opened lower after the pan-European Stoxx 600 finished Monday’s trading session marginally lower to begin August. The index fell 0.7% in early deals, with basic resources leading losses. In individual stocks, UK oil major BP increased its dividend as it posted solid second-quarter profits due to a rally in commodity prices. The company’s shares climbed 4% in early trade.
In currencies, the dollar index dropped to nearly one-month lows around 105.00 early on Tuesday before bouncing back into positive territory as risk aversion reemerged amid rising tensions surrounding Taiwan. The greenback recovered to the 105.00 zone, thus pushing the shared currency into bearish zone on the daily charts from local peaks seen just below 1.0300. Should investor sentiment continue to deteriorate in the near term, the euro may see deeper losses before resuming the ascent.
