Hong Kong, US-China trade war, currencies in focus

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Stocks in Asia were set to trade lower on Tuesday, as Hong Kong will attempt to return to normalcy following crippling protests in the last few days.

Futures pointed to a lower open for Japanese shares, which return to trade Tuesday following a holiday yesterday. The Nikkei futures contract in Chicago was at 20,285, while its counterpart in Osaka was at 20,500. The Nikkei 225 last closed at 20,684.82.

Stocks in Australia were also set to decline at the open. The SPI futures contract was at 6,480.0, as compared to the S&P/ASX 200’s last close at 6,590.30.

Meanwhile, Hong Kong authorities will attempt to restart flights at the airport after operations were crippled on Monday due to protests, which have turned increasingly violent since June. The airport authority had said it was working with airlines to resume flights from 6 a.m. on Tuesday.

The Hang Seng index continued its slide throughout the past week, closing at 25,824.72 on Monday. 

The Chinese yuan midpoint will also be watched when it comes out around 9:15 a.m. HK/SIN. The People’s Bank of China set the midpoint above the psychologically important 7-yuan-per-dollar level for the third consecutive session on Monday. The Chinese currency has been closely watched by investors in recent days after it weakened past the 7 level against the greenback last week, leading the U.S. Treasury Department to designate China a currency manipulator.

Asia-Pacific Market Indexes Chart

Overnight stateside, the Dow dropped 391 points to close at 25,896.44, while the S&P 500 fell 1.24% to end its trading day at 2,882.44. The Nasdaq Composite declined 1.2% to close at 7,863.41.

That came as bond yields declined amid concerns over the state of the global economy. The benchmark 10-year Treasury yield, which fell to its lowest since 2016 last week, dipped to 1.63% on Monday. The spread between 2-year and 10-year Treasury yields narrowed to only 6 basis points on Monday, near its lowest level since 2007. It was last at 1.6403%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.380 after falling from highs above 97.5 yesterday.

The Japanese yen traded at 105.25 against the dollar after seeing lows above 105.5 in the previous session, while the Australian dollar changed hands at $0.6750 following a decline from levels above $0.676 yesterday.

What’s on tap today:

  • Australia earnings: Challenger
  • Hong Kong earnings: WH Group, Sunny Optical

— CNBC’s Yun Li and Reuters contributed to this report.

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