HONG KONG, December 5 -- Traders put the brakes on a three-day roll of gains in the battered markets of mainland China and Hong Kong, as concerns mounted about a slowing US economy following a slump in the Treasuries yield and President Donald Trump’s tweets added to confusion about the progress in trade talks. In Wednesday morning trading, the Shanghai Composite Index slipped 0.4 per cent and the Hang Seng Index sank 1.5 per cent. Benchmarks across Asia all fell, with Japan’s Nikkei 225 index falling 1.4 per cent. The regional sell-off came as US traders increased their buying of bonds and unwound their equity holdings amid concerns growth of the world’s largest economy may have already peaked. Major US stock gauges had their biggest slide since October in overnight trading, with the Dow Jones Industrial Average, the Standard and Poor’s 500 Index and the Nasdaq Composite Index all falling at least 3.1 per cent. Meanwhile, the yield on 10-year treasuries tumbled to 2.91 per cent. The further flattened yield curve suggested that bond traders were pricing in weaker growth going forward. Traders also had their eyes on the yield gap, as three-year yields climbed above those of their five-year peers, potentially foreshadowing that the Federal Reserve will end the current cycle of raising interest rates. “The risk of slowing US growth is looming so there is a risk-averse sentiment in the equity market,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “If the slowdown is sharp, the global markets will be in for bigger turmoil.” Sentiment was also dented as investors reassessed the outlook of the trade tension between China and the US after the top leaders from the two nations reached a 90-day truce over the weekend. Trump suggested Tuesday that he could extend the truce with China, while his top White House economic adviser backtracked from the president’s announcement that Beijing had agreed to reduce tariffs on imports of US-made cars. The Shanghai Composite Index lost 11.70 points to 2,653.80. The Hang Seng Index shed 419.73 points to 26,840.71 and the Hang Seng China Enterprise Index, or the H-share gauge, dropped 1.4 per cent. In the mainland, stocks linked to the investment theme of a technology board on the Shanghai exchange tumbled after the regulator increased scrutiny of trading. Luxin Venture Capital Group slumped by the 10 per cent daily limit to 16.71 yuan and Kunwu Jiuding Investment Holdings also plunged by the magnitude to 19.03 yuan. Both stocks had at least more than doubled over the past two months after Xi unveiled the plan in the import expo in November. In Hong Kong, companies with most exposure to the US market led the decline. Sunny Optical Technology Group sank 6.6 per cent to HK$74.55 and AAC Technologies retreated 3.4 per cent to HK$54.80.
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