GLOBAL MARKETS – Stocks fall as growth risks sap confidence; bonds, dollar in demand


By Kevin Buckland

TOKYO, July 25 (Reuters) – Asian stocks lost ground on Monday, falling more than three weeks, as worries about a global economic slowdown sapped investors’ risk appetite.

Bond yields eased amid bets that a U.S. recession would slow the Federal Reserve’s aggressive tightening campaign, with markets looking for political clues at its two-day Federal Open Market Committee meeting that begins on Tuesday.

Meanwhile, the dollar benefited from its recovery from a 2.5-week low against its major peers, supported by demand for the US currency as a safe haven.

“Risk markets are obviously priced for some kind of downturn, but are they priced for an outright recession? I would say no,” said Ray Attrill, head of currency strategy at National Australia Bank.

“In that sense, it’s hard to say we’ve bottomed out when it comes to risk sentiment.”

The Japanese Nikkei fell 0.75%, while Chinese blue chips fell 0.13%.

Hong Kong’s Hang Seng slid 0.45% as its tech index fell 1.51%

MSCI’s broadest index of Asia-Pacific stocks fell 0.62% to 158.68, after hitting the highest since June 29 at 160.03 on Friday.

US S&P 500 emini futures fell 0.09%, indicating an extension of the benchmark’s 0.93% tumble on Friday, when a survey showed trading activity contracted for the first time in almost two years in an environment of persistently high inflation and rapidly rising interest rates.

Earlier in the day, data also showed euro zone business activity unexpectedly contracted.

Nasdaq futures fell 0.04% after the tech-heavy stock index fell 1.77% as the bottom fell under Snap Inc after the Snapchat owner posted its lowest ever sales growth.

Investors are on their toes this week for how much a strong dollar will hurt the financial results of heavyweights Apple and Microsoft, among others.

The dollar index – which measures the safe-haven currency against six major peers – edged up 0.1% to 106.81, climbing further from a 2.5-week low of 106.10 hit on Friday.

The greenback gained 0.29% to 136.485 yen, while the euro slipped 0.24% to $1.01875.

The 10-year US Treasury yield was little changed at 2.79% after slipping 3.083% in the previous two sessions.

Japanese government bond equivalent yields fell to the lowest since March 14 at 0.19%, and Australian yields fell to the lowest since May 31 at 3.285%.

The Fed wraps up a two-day meeting on Wednesday and markets are pricing in a 75 basis point rate hike, with about a 9% chance of a full one percentage point hike.

In commodities, Brent added 0.15%, or 15 US cents, to $103.35 a barrel. Nymex light crude was slightly higher at $94.75.

Gold slid 0.14% to $1,724.05 an ounce.

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)