Stocks in Asia were lower in on Tuesday morning following an overnight sell-off on Wall Street. Investors are keeping a close watch on a major speech by Chinese President Xi Jinping as China prepared on Tuesday to commemorate the 40th anniversary of its economic reforms and opening up.
The mainland Chinese markets, which have been closely watched in relation to Beijing’s trade dispute with Washington, were fractionally lower in early trade. The Shanghai composite slipped 0.06 percent and the Shenzhen composite was lower by 0.092 percent. In Hong Kong, the Hang Seng index was largely flat.
President Xi will be delivering a speech at 10 a.m. HK/SIN (9 p.m. ET Monday) as China marks the 40th anniversary of the country’s economic reforms. Earlier in December, one analyst told CNBC the much-anticipated speech may be an opportunity for Beijing to emphasize its commitment to transform its economy.
“If that day or week goes by with no major new announcements, then we know that for sure there’s not a possibility that the Chinese want to use this as an opportunity to change the direction of their economy and industrial policies,” Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies, told CNBC’s “Squawk Box” on Dec. 3.
Japan’s Nikkei 225 fell 1 percent in morning trade while the Topix index declined by 1.1 percent. Shares of industry heavyweight Fast Retailing fell around 1.5 percent.
Over in South Korea, the Kospi was near flat as shares of chipmaker SK Hynix declined by 1.61 percent.
The ASX 200 in Australia also fell and was lower by about 0.86 percent, with almost all sectors seeing losses.
Shares of major miners in Australia largely recovered after earlier seeing losses. Rio Tinto traded up by 0.46 percent and BHP Billiton saw gains of 1.27 percent. Fortescue Metals Group, however, slipped 0.6 percent.
In the U.S. markets, stocks fell sharply ahead of the Federal Reserve Bank’s anticipated rate hike this week.
The S&P 500 fell 2 percent to 2,545.94 — its lowest close for 2018. The Dow Jones Industrial Average also plunged 507.53 points to close at 23,592.98, ratcheting up a combined two-day loss of more than 1,000 points.
All 30 stocks in the Dow and all 11 sectors in the S&P 500 posted losses on Monday.
The Dow and S&P 500, which are both in correction territory, are on track for their worst December performance since the Great Depression in 1931, down more than 7 percent so far for the month. The S&P 500 is now in the red for 2018 by 4 percent.
The Nasdaq Composite also saw declines, falling 2.2 percent to end the trading day at 6,753.73.
The Cboe Volatility Index — one of Wall Street’s gauges of market fear — rose above 25 and volume for the stock market was heavier than usual.
The Fed is widely expected to hike its benchmark overnight lending rate for a fourth and final time of 2018 on Wednesday. While fears of rising interest rates and an ambitious central bank have spooked markets throughout the year, such concerns have heightened over the past month as inflation and growth expectations recede.
U.S. President Donald Trump took aim at the Fed again on Monday, saying in a tweet that “it is incredible” that the central bank was “even considering yet another interest rate hike” amid the “outside world blowing up around us.”
Trump has openly criticized the Fed, as well as Chairman Jerome Powell, multiple times this year. The president has gone so far as to say the Fed has “gone crazy” with monetary policy, and thinks “the rate’s too high.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.118 after touching an earlier high above 97.4.
The Japanese yen, widely viewed as a safe-haven currency, traded at 112.74 against the dollar after seeing lows around the 113.5 handle in the previous session. The Australian dollar was at $0.7195 after seeing an earlier low of $0.7170.
— CNBC’s Thomas Franck, Yen Nee Lee and Michael Sheetz contributed to this report.
