European markets were down on Tuesday as Asian stocks reached their lowest this year. Additionally, real bond yields touched record lows ahead of a Federal Reserve policy meeting.
Weakness in Asia weighed on European stocks, which dropped 0.92%, moving further away from recent record highs. Remarkably, Britain’s FTSE 100 fell 0.3% to 7,004.39. The Dublin market was 0.22% lower. Meanwhile, global stocks declined by 0.35%.
The Hong Kong benchmark slipped 4.22%, or 1,105.89 to 25,086.43. The Hang Seng Tech index dropped 8.69% to its lowest since its inception in July 2020. It has fallen about 17% in three days and has lost 44% from a February high.
Big decliners included Meituan and Alibaba. Meituan shares fell 16.1%, while Alibaba shares dipped and 5.5%. Both companies were down for the third successive day. Investors are anticipating the companies’ food delivery arms to be affected by new regulations guaranteeing employees above minimum pay.
Additionally, Chinese blue chips sank 3.53%, also hitting 2021 lows, thanks to regulatory crackdowns in the education and property sectors.
Moreover, MSCI’s broadest index of Asia-Pacific shares excluding Japan dropped 2.2% to its lowest level since December. It has fallen 2.45% in the previous day.
The Shanghai Composite fell by 2.49%, or 86.26, to 3,381.18. Meanwhile, the Shenzhen Component dipped 3.67% to 14,093.63. Japan’s Nikkei increased 0.49% or 136.93 to 27,970.22.
Alphabet, Apple and Microsoft will publish quarterly results later today
Tech giants, Alphabet, Apple and Microsoft, will publish quarterly results late on Tuesday. Meanwhile, an e-commerce titan, Amazon, is set to report quarterly results later in the week.
The Fed is set to start its two-day meeting on Tuesday. Meanwhile, investors are waiting for a statement and press conference from Chair Jerome Powell due late Wednesday.
Investors are waiting to see how the central bank will balance fast-increasing prices with the complication of boosted COVID-19 infections.
Real, or inflation-adjusted, bond yields in the U.S. and Europe have dropped to record lows. Meanwhile, the yield on 10-year Treasury inflation-protected securities reached -1.147%. It fell by 4 basis points on the day. German inflation-linked bond yields also continued declining, hitting a new low at about -1.747%.
ING Bank strategist Antoine Bouvet announced that thin market liquidity and hefty central bank bond-buying contributed to a decline in real yields.
Additionally, the yield on benchmark 10-year U.S. Treasury notes slid one basis point, and 10-year German Bund yields fell 2.6 basis points, near a 5-1/2 month low set on July 26.