Asia shares sit at 2021 lows ahead of Fed decision, China steadies
By Alun John
HONG KONG, July 28 (Reuters) - Asian equities looked set for a fourth straight day of losses on Wednesday as a storm in Chinese equity markets rippled across the region, boosting safe-haven currencies ahead of a Federal Reserve policy meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.91%, though markets in Hong Kong and mainland China saw milder losses after a sharp sell-off in the previous sessions.
U.S. stock futures, the S&P 500 e-minis ESc1 , were down 0.26%, pan-region Euro Stoxx 50 futures STXEc1 dropped 0.11%, and FTSE futures FFIc1 fell 0.3%.
Asian shares have fallen in each of the three previous sessions as broadening regulatory crackdowns in China roiled stocks in the technology, property and education sectors, leaving international investors bruised.
Chinese state-run financial media urged calm on Wednesday morning, and while Chinese shares swung back and forth in early trading, they did not repeat the sharp plunges seen earlier in the week.
Chinese blue chips .CSI30 were last 0.46% lower, having had a volatile day, and the Hong Kong benchmark .HSI gave up early gains to fall 0.82%. Both were pinned around eight-month lows.
The embattled Hang Seng Tech Index .HSTECH also gave up early gains to fall 0.4%, a day after touching its lowest level since the index's creation in July 2020. It is down over 40% from its February high.
Japan's Nikkei .N225 slid 1.73%, with shares in SoftBank Group 9984.T , a major investor in Chinese tech, falling 4.7%.
"China and the Fed are the two key things for today," said Tai Hui, chief market strategist for Asia Pacific, at JPMorgan Asset Management.
"We are still trying to digest the news from China, what's going to be new is how the Fed view the latest round of (COVID-19) infections and whether they need to readjust their view," he said.
The statement from the Fed policy meeting is due at 2 p.m. EDT (1800 GMT), with a news conference by Chairman Jerome Powell expected a half hour later.
Markets will be watching closely for any hints on when the Fed will start reducing its purchases of government bonds and any fresh insight into its views on inflation and economic growth.
The declines in Asian equities on Tuesday spread to other markets overnight, causing Wall Street to retreat a little from the record highs set earlier in the week.
The Dow Jones Industrial Average .DJI ended Tuesday down 0.2%, the S&P 500 .SPX shed 0.5% and the Nasdaq Composite .IXIC slid 1.2%.
After the U.S. close, Google parent Alphabet Inc GOOGL.O , Microsoft MSFT.O , and Apple AAPL.O all reported record quarterly earnings, though the smartphone maker's shares slid in after-hours trading on the back of a slower growth forecast.
In currency markets, things were fairly quiet in Asian trading hours, with the U.S. dollar sitting below recent highs after a month-long rally.
The safe-haven yen held onto earlier gains and the risk-sensitive Australian and New Zealand dollars dropped back, but while analysts at CBA attributed the earlier moves to falling risk sentiment on the back of the Chinese regulatory crackdown, they said market participants were now turning their attention to the Fed.
The yield on benchmark 10-year Treasury notes US10YT=RR was little changed from the U.S. close at 1.236% compared to 1.234%.
Oil prices rose as industry data showed U.S. crude and product inventories fell more sharply than expected last week, outweighing worries that surging COVID-19 cases would curb fuel demand.
U.S. crude CLc1 rose 0.56% to $72.05 a barrel and Brent crude LCOc1 rose 0.36% to $74.81 per barrel.
Gold strengthened, with spot prices XAU= above the key psychological level of $1,800, while Bitcoin BTC=BTSP rose around 1.3%, trading either side of $40,000.
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Editing by Ana Nicolaci da Costa and Kim Coghill
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