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Asian stocks stall amid global volatility

Asian stocks stayed at two-year lows on Wednesday, after a strengthening U.S. dollar, instability in the U.K. bond market, and forthcoming U.S. inflation data spelled a wild session on Wall Street and further volatility for investors.

In Japan, confidence among manufacturers fell for a second straight month, according to a Reuters poll, sending the dollar/yen above 146 for the first time since 1998. The Nikkei share average opened up 0.17%.

Japan will take necessary steps in the foreign exchange market if needed and there is no change in the country’s stance at all, the Jiji Press news agency quoted Finance Minister Shunichi Suzuki as saying on Wednesday.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.04%, while Seoul’s KOSPI index fell 0.08% and. Australia’s resources-heavy index was up 0.2%.

Overnight, there was little good news to be had.

The International Monetary Fund cut its 2023 global growth forecast from 2.9% to 2.7%, warning that pressures from inflation, war-driven energy and food crises, and higher interest rates may tip the world into recession and financial market instability.

The Bank of England warned UK pensions funds and other investors to get their houses in order by Friday, when it would end a huge bond-buying programme aimed at calming roller-coaster moves seen by gilts and sterling in recent days.

The warnings, ahead of U.S. inflation data on Wednesday and Thursday that is expected to keep the Fed on an aggressive rate hike path, tanked stocks on Wall Street.

The S&P 500 and Nasdaq Composite fell 0.65% and 1.10%, though the Dow Jones Industrial Average managed to close up 0.12%.

Benchmark 10-year notes dipped to 3.9470%, after opening at 3.9510%.

Brent crude futures fell 51 cents, or 0.5%, to $93.78 a barrel by 0033 GMT. U.S. West Texas Intermediate crude was at $88.66 a barrel, down 69 cents, or 0.8%. It was the third straight dip in prices as investors worried about falling fuel demand and tightening COVID-19 curbs in China.

Spot gold dropped 0.12% to $1,663.1 an ounce.

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