Asia stocks fall as yuan-slide contagion assessed

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Stocks in Asia extended declines and the yuan slumped once again amid debate surrounding the impact of an escalating trade war and fear of contagion to emerging markets. Treasury yields dipped and the dollar steadied.

Share indexes in Tokyo and Seoul reversed earlier gains after China’s currency tumbled past 6.7 per dollar, a level that some had thought would trigger intervention from authorities. The yuan indeed showed a sudden comeback mid-morning, before dropping again. Hong Kong’s stocks tumbled in a catch-up after the city was off on holiday Monday. Australian stocks stood out, as they have repeatedly in recent weeks, as outperformers in the region. Equity futures signaled losses in Asia won’t extend into the U.S. and the U.K.

With U.S. trading desks thinly staffed ahead of the July 4 holiday, volume in American stocks was about 20 percent below average when the S&P 500 Index edged up. An expansion in U.S. manufacturing gave some comfort to concern borne out of reports in Japan, China and South Korea over the past few days about a weakening in global economic growth. The Trump administration’s planned imposition of tariffs against China will start on Friday.

Elsewhere, crude rose after declines Monday triggered by U.S. President Donald Trump putting pressure on Saudi Arabia to ramp up oil output.

These are key events coming up this week:

The Reserve Bank of Australia has its policy decision Tuesday. The U.S. celebrates Independence Day on Wednesday, July 4. Stock and bond markets are closed, along with government offices. Federal Reserve releases minutes of its June 12-13 meeting, when FOMC policy makers raised the benchmark rate a quarter point for the second time this year and lifted the median forecast to four total increases in 2018. U.S. payrolls are due Friday. Also on Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. Beijing has said it will slap tariffs on an equal value on U.S. exports including agricultural and auto exports.

Here are the main market moves:

Japan’s Topix index dropped 0.7 percent as of 1:19 p.m. in Tokyo after rising as much as 0.5 percent earlier. Futures on S&P 500 and on the U.K.’s FTSE 100 Index were flat. Australia’s S&P/ASX 200 Index added 0.5 percent. South Korea’s Kospi dropped 0.3 percent. Shanghai Composite Index dropped 1.3 percent. Hong Kong’s Hang Seng tumbled 2.7 percent

The Bloomberg Dollar Spot Index was flat. The euro slipped less than 0.1 percent to $1.1635. The yuan lost 0.5 percent to 6.6993 per dollar. The pound bought $1.3135. The Aussie held at 73.39 U.S. cents.

The yield on 10-year Treasuries dipped one basis point, to 2.86 percent. Australia’s 10-year government bond yield was steady at 2.59 percent.

The Bloomberg Commodity Index added 0.2 percent. It fell 1.9 percent on Monday, the most since November 2016. West Texas Intermediate crude added 0.9 percent to $74.60 a barrel. Gold lost 0.2 percent to $1,239.81 an ounce. — Bloomberg