Asian equity markets lacked direction early Wednesday, as investors retreated to the sidelines ahead of bellwether global events this week.
The planned public testimony by former FBI Director James Comey on Thursday continued to stoke concerns about U.S. political instability. Additionally, investors’ showed their nerves ahead of a European Central Bank policy meeting and the U.K. general election, both scheduled for Thursday.
The trio of risk events have been “sufficient to keep markets on the defensive,” OCBC Bank said in a note Wednesday. “For today, Asian bourses may be content to tread water.”
The Nikkei Stock Average NIK, -0.17% was down 0.2% in early trade, having edged back from the 20,000 the previous session. Meanwhile, Australia’s S&P/ASX 200 XJO, -0.12% and Korea’s Kospi SEU, -0.10% were both off 0.1%.
Japanese stocks were dragged down by interest-rate-sensitive insurers. MS&AD Insurance Group Holdings 8725, -1.65% was down 1.4%, while T&D Holdings 8795, -0.72% was 1.3% lower. In Australia, the country’s “big four” banks were down about 0.4%.
Stocks in China, meanwhile, were markedly higher, after some listed companies sent notices to employees that markets saw as offering a short-term boost to share prices.
Since Tuesday afternoon, 10 companies, including Qingdao Kingking Applied Chemistry 002094, -3.58% , issued statements to the effect that the company’s controlling shareholders were encouraging employees to buy shares and would compensate them should losses occur.
In Hong Kong, the Hang Seng Index HSI, +0.09% added 0.2%, led by gains in smartphone audio components supplier AAC Technologies 2018, +16.60% , which surged 16% on its trading resumption. The company’s shares were battered after short-seller Gotham City in May accused it of dubious accounting practices, allegations the company has repeatedly denied.
Events took an interesting turn on Tuesday, when another short seller, Anonymous Analytics, backed the Apple supplier with a report titled “Hong Kong Deserves A Better Hero.” It criticized Gotham City’s earlier report on AAC as “grossly misleading.” The Anonymous report came just hours before AAC hosted a news briefing to further rebut Gotham’s allegations.
In currency markets, the Korean won came under pressure against the U.S. dollar, following a stock market holiday Tuesday and amid Korean investors catching up with the risk-aversion sentiment. The dollar was last up 0.3% at 1120.00 won, though the Kospi shrugged off the favorable currency winds.
Meanwhile, the yield on the benchmark 10-year U.S. government note closed overnight at the lowest level since Nov. 10, while London spot gold was up 1% so far this week.
“The ongoing rally in bonds and gold plus the weak dollar is interesting,” said Ric Spooner, chief market analyst at CMC Markets. “It suggests caution ahead of this week’s major risk events.”
Elsewhere, crude oil faced selling pressure in Asia, after posting gains in the U.S. session following another upward revision of production estimates for the year by the U.S. Energy Information Administration. The EIA now expects U.S. crude output rise to 9.33 million barrels this year as oil digging operations expand.
July WTI was recently down 11 cents at $48.08 a barrel, while Brent for August delivery was 8 cents lower at $50.04 a barrel.