SYDNEY- Asian shares fell on Wednesday after a slowdown in China’s services activity dented sentiment and as markets turned their focus to the release of Federal Reserve minutes and a key US jobs report later in the week.
Market conditions were subdued following the Independence Day public holiday on Wall Street on Tuesday. S&P 500 futures dipped 0.1 percent and Nasdaq futures fell 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan skidded 0.7 percent. Japan’s Nikkei also fell 0.4 percent, marking the second straight session of declines after climbing to fresh three-decade highs.
Australia’s resources heavy shares fell 0.2 percent after the Reserve Bank of Australia held rates steady on Tuesday but warned of more tightening ahead.
In China, a survey showed the expansion in the services sector continued to slow in June, adding to signs that the country’s post-COVID recovery is losing steam.
Chinese blue chips fell 0.5 percent and Hong Kong’s Hang Seng index slumped 1.3 percent.
“While it may feel like China has taken two steps back, the next move could be three forward,” said Andrew McCaffery, global chief investment officer at Fidelity International, adding that Chinese shares are trading at a significant discount.
“This may feel slightly contrarian at present, but it is an attractive entry point, especially as there are some signs of stabilization in the US/China relationship.”
US Secretary of Treasury Janet Yellen will visit China later this week, but escalating tensions in the tech space, with Beijing restricting exports of two metals and Washington reportedly banning Chinese firms from accessing cloud computing, weighed on broader sentiment.
However, shares of some Chinese makers of products used to make chips rallied as supply concerns sent prices of the metals higher.
Traders are now looking ahead to the release of the minutes of the Fed’s last policy meeting later on Wednesday and the non-farm payrolls report on Friday.
Markets are almost certain that the Fed will hike in July after pausing last month.
