Asian markets fall after Wall Street woes

A man wearing a protective mask looks at an electronic board displaying Japan's Nikkei index outside a brokerage in Tokyo in the wake of the coronaviruses disease COVID 19 outbreak.

TOKYO Reuters - Stocks fell across Asia on Wednesday morning, extending overnight losses on Wall Street amid concerns over the economy, inflation and high oil prices.

Japan's Nikkei index fell 1.01% in early trading, while MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1%, dragged lower by Australian shares, off 1.29%, and Korea's KOSPI, down 1.57%.

Asian shares ended up on a positive trajectory after China announced an easing of its quarantine requirements for inbound passengers, a move that some observers saw as the biggest relaxation of its zero COVID strategy.

The impact was petering out on Wednesday.

Inevitably, markets tend to react to these kinds of news, said Carlos Casanova, senior economist at UBP in Hong Kong. In order to be sustainable, we really want to see these measures materialise into actual reopening. The Chinese blue chips that hit a four week high the day before lost 0.6%, while the Hong Kong benchmark fell 1.3%. SS The losses in Asia followed a turbulent day on the US markets, with the S&P 500 index down more than 2% after U.S. consumer confidence dropped to a 16 month low in June due to fears that high inflation could cause the economy to slow significantly in the second half of the year.

The dollar index was firm at 104.4 and investors were moved to the safe haven dollar because of worries over the potential for a global recession.

The euro was down 0.6% on the dollar overnight, and was little changed in early Asia at $1.0529. The Japanese yen was at 136.03 per dollar, not far from the 24 year low of 136.7 last week.

The yen has struggled as the Bank of Japan keeps monetary policy loose even as other major banks tighten, a point reiterated by BOJ governor Haruhiko Kuroda on Wednesday.

The yield on 10 year U.S. Treasury notes was flat at 3.1697%.

After three sessions of gains, oil prices fell back slightly, but global supply tightness underpinned the market. Brent crude futures fell by 0.53% to $117.35 a barrel on the day. U.S. crude was down 0.37% to $111.39, down 0.37%.

"I think immediate prices will likely remain elevated," said Casanova, a UBP spokesman. I don't think that we will see a significant spillover onto other Asian asset classes, excluding bonds for countries that are very sensitive to changes in energy prices. Spot gold rose slightly, gaining 0.15% to trade at $1,822. 48 an ounce.