Business Maverick: Stocks drop as US-China tension stirs haven demand: markets wrap

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Stocks in Asia retreated on Tuesday amid escalating US-China tension over Taiwan and deepening worries about a global economic slowdown, risks that are supporting demand for Treasuries as a haven.

An Asian share index shed over 1%, with some of the steepest falls in Hong Kong, China and Taiwan. US and European futures were also in the red as July’s equity market rebound stumbles into August.Taiwan on Tuesday. She would become the highest-ranking American politician to visit the island in 25 years. China views Taiwan as its territory and has warned of consequences if the trip takes place.

The offshore yuan dipped and the Taiwanese dollar weakened. A relatively firm dollar gauge and gains in the yen hinted at a mood of caution. Gold climbed. Investors are also keeping a wary eye out for more potentially hawkish comments from Federal Reserve officials about the need for higher interest rates to restrain elevated inflation.

“You’re going to continue to see a lot of the Fed-speak continue to be fairly hawkish,” Larry Adam, chief investment officer at the private client group at Raymond James Financial, said on Bloomberg Television. But he expects easing inflationary pressures to allow the Fed to be “a little bit more accommodative as we head into the back half of the year”.

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