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MSCI world index falls 0.4% Bond yields are falling Pelosi will visit Taiwan Australian dollar weakens after central bank rate hike

LON.S. House Speaker Nancy Pelosi DON/TOKYO, Aug 2 (Reuters) – Global stocks fell and bond yields fell on Tuesday, heightening fears of a global recession on concern that a visit by the speaker of the U.S. House of Representatives , Nancy Pelosi, in Taiwan could allow further. damage relations between China and the United States. Investors sought safer assets after China threatened repercussions if Pelosi visits the self-governing island, which Beijing claims as its territory. Long-term U.S. bond yields fell to a four-month low, while eurozone bond yields edged lower. They beat the dollar and the Japanese yen. Crude oil also sank as investors amid signs of a global manufacturing slowdown. Sign up now for FREE unlimited access to Reuters.com Register Pelosi was expected to arrive in Taipei later on Tuesday, with several Chinese warplanes flying near the median line dividing the Taiwan Strait, a source told Reuters. China has repeatedly warned against Pelosi going to Taiwan. Washington said on Monday it will not be intimidated by China. read more The MSCI world stock index (.MIWD00000PUS), which tracks shares in 47 countries, fell 0.4 percent. The broad Euro STOXX 600 index (.STOXX) fell 0.7% before recovering some of its losses. Wall Street stocks were set to fall about 0.7 percent, futures showed. “It’s all about the Taiwan threat,” said Robert Alster, chief investment officer at Close Brothers Asset Management. “There’s no way anyone can say it hasn’t moved on the geopolitical agenda.” The Taiwan issue added to a sense of concern sparked by China, Europe and the United States on Monday, which reported weakening factory activity, with that in the US slowing to the lowest level since August 2020. Read more The yield on the benchmark US 10-year note fell as much as 2.53% in Tokyo trade, the lowest since April 5, also benefiting from bets that a slowdown could prompt the Federal Reserve to ease off the policy-tightening pedal . Germany’s 10-year government bond yield fell 4.5 basis points to 0.72%, after hitting its lowest level since early April. Brent futures fell to $99.55 a barrel after losing nearly $4 overnight. U.S. West Texas Intermediate futures also fell to $93.59, extending Monday’s slide of nearly $5. MSCI’s broadest index of Asia-Pacific shares (.MIAP00000PUS) fell 1.3 percent. Taiwan’s stock index (.TWII) fell as much as 1.9%, while Chinese blue chips (.CSI300) fell 2.5% before paring some of their losses.

AUSSIE FAILS

The flight to safety also took place in the currency markets. The US dollar fell to 130.40 against the Japanese yen, levels not seen for nearly two months. Against a basket of currencies, the greenback rose 0.25% to 105.61. The Taiwan dollar fell to a two-plus-year low on the weaker side of 30 per US dollar. Australian shares fell and the Australian dollar weakened after the central bank raised its key interest rate by 50 basis points as expected, with markets interpreting changes in the accompanying policy statement as risky. read more The Aussie was 0.51% lower at $0.69910, extending a 0.14% retreat after the Reserve Bank of Australia’s policy decision. It had hit its highest level since June 17 at $0.7048 in the previous session, but that was after bouncing back from a 26-month low of $0.66825 in the middle of the previous month. “Australia has underperformed other major currencies of late due to concerns about global growth, so it really needed a big surprise to reignite its recovery from 2-year lows,” said Sean Callow, currency analyst at Westpac in Sydney. “Instead, it left the RBA leaving the door wide open to slow the pace of tightening at future meetings.” Cryptocurrencies, a barometer of risk-taking, also fell, with bitcoin sliding 2.3% to $22,753. Sign up now for FREE unlimited access to Reuters.com Register Reporting by Tom Wilson in London and Kevin Buckland in Tokyo. Additional reporting by Tom Westbrook. Edited by Robert Birsel and Angus MacSwan Our Standards: The Thomson Reuters Trust Principles.