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Chinese stocks were the worst performers for the day, ending a mild recovery seen over the past three sessions and moving back towards six-month lows. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.5% and 0.4%, respectively, while Hong Kong’s Hang Seng index fell 1%.
A private survey showed on Wednesday that China’s service sector grew less than expected in June, drawing up concerns over a slowing economic recovery in the country.
The reading follows weak readings on manufacturing activity, and pointed to softening growth in the second quarter as China’s biggest economic engines ran out of steam.
Still, analysts at IG said the soft Chinese data could attract more stimulus measures from Beijing, following liquidity injections and interest rate cuts earlier in the year.
But the weak readings also came as China blocked the export of key chipmaking materials to the U.S., marking a potential escalation in a trade conflict between the world’s largest economies. The move brewed concerns over retaliatory moves that could further disrupt global trade and undermine already weak global economic conditions.
In addition to concerns over China, Asian markets were also skittish ahead of the release of the minutes of the Federal Reserve’s June meeting later in the day.
The minutes are expected to shed more light on the Fed’s plans for interest rate hikes this year, after the central bank flagged at least two more raises during its June meeting.
South Korea’s KOSPI fell 0.4%, while the Taiwan Weighted index shed 0.2%.
Japan’s Nikkei 225 fell 0.4%, while the broader TOPIX lost 0.2%, as both indexes continued to see heavy profit taking from 33-year highs. Data on Wednesday still showed some signs of resilience in the Japanese economy, with service sector activity growing further in June.
Australia’s ASX 200 shed 0.3% as data showed the country’s service sector barely grew in June.
Indian stocks remained a key outlier among their Asian peers, with the Nifty 50 and BSE Sensex 30 indexes closing at record highs on Tuesday. Singapore-traded futures for the Nifty pointed to a mildly positive open for local stocks on Wednesday.
