Hong Kong stocks led sharp losses in Asia-Pacific markets after the S&P 500 set a new 2022 low overnight on Wall Street. The offshore and onshore Chinese yuan reached weakest levels since 2008 and the Indian rupee also marked a record low.
Hong Kong's Hang Seng index dropped 3.45% in the final hour of trade, with the Hang Seng Tech index down 3.88%. In mainland China, the Shanghai Composite was 1.58% lower at 3,045.07, and the Shenzhen Component fell 2.465% to 10,899.70.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2.32%, reaching lowest levels since March 2020. In Australia, the S&P/ASX 200 was 0.53% lower.
The Dow Jones Industrial Average gave up earlier gains of around 400 points to fall 125.82 points, or 0.43%, to 29,134.99 at the end of the session. The Nasdaq Composite was up 0.25% to 10,829.50.
— CNBC's Sarah Min and Jesse Pound contributed to this report.
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China's yuan is likely to return to a 'reasonable range' soon
The yuan will likely return to a "reasonable range" between six and seven versus the U.S. dollar — as soon as next year, said Han Baojiang, director of the department of economics, Party School of the Central Committee of the Communist Party of China.
That's according to a CNBC translation of his Mandarin-language remarks at a virtual event held by the All-China Journalists Association.
He said that in his view, the yuan's depreciation is tied, to a certain extent, to China's economic difficulties right now.
Next month's 20th National Congress of China's Communist Party is set to provide a clearer description of policy, which will help expectations, he said.
Han said in response to a separate question that Chinese President Xi Jinping's message of opening up further will be prevalent in the congress' report, and that after the congress, he expects China will open up more than ever before.
— Evelyn Cheng
Indian rupee hits record 81.94 against the U.S. dollar
The Indian rupee weakened to a record against the U.S. dollar, hitting 81.940 per dollar. It last traded at 81.905 against the greenback.
The buoyant U.S. dollar has strengthened nearly 10% against the Indian rupee so far this year.
— Abigail Ng
U.S. 10-year Treasury yield breaches 4% for the first time since 2010
The yield on the policy-sensitive 2-year Treasury was at 4.2953%. Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.
CNBC Pro: Credit Suisse says now's the time to buy two green hydrogen stocks — and gives one over 200% upside
Credit Suisse says it's time to enter the green hydrogen sector, with a number of catalysts set to drive the clean energy powerhouse.
"Green hydrogen is a growth market — we increase our 2030 market estimates by [over] 4x," the bank said, forecasting that green hydrogen production will expand by around 40 times by 2030.
It names two stocks to play the boom — giving one upside of more than 200%.
— Weizhen Tan
Chinese yuan at weakest since 2008, dollar index strengthens
The offshore and onshore Chinese yuan breached 7.2 against the dollar, hovering at weakest levels since early 2008.
The U.S. dollar index also strengthened by 0.33%, trading at 114.47.
Consumer inflation in Japan could decline in 2023: BOJ meeting minutes
Consumer inflation excluding fresh food is likely to rise this year, but the rate of increase will slow thereafter on energy prices, minutes from Bank of Japan's July meeting said.
A few members also said inflation, excluding fresh food and energy, is unlikely to reach 2% within its projection period. That CPI reading was 1.6% in August.
"These members expressed the view that, unless commodity prices continued to rise, the CPI inflation rate was expected to decline from fiscal 2023 onward," the minutes said.
On the yen, one BOJ board member said downward pressure on the currency could be alleviated if a slowdown in the global economy led to a decline in inflation and interest rates worldwide.
Another member said the yen could even appreciate if the global economy faces shocks.
— Abigail Ng
CNBC Pro: Asset manager reveals what's next for stocks — and shares how he's trading the market
Neil Veitch, investment director at Edinburgh-based SVM Asset Management, says he expects the macro landscape to remain "quite difficult" for the remainder of the year.
Speaking to CNBC Pro Talks last week, Veitch named the key drivers that could help the stock market to turn "more constructive" and shared his take on growth versus value.
— Zavier Ong
Earnings questions, potential recession mean more selling could be ahead
The Dow and S&P 500 have fallen for six straight days, with many of those seeing broad selling typical of so-called "washout" days.
That can sometimes be a contrarian buy signal on Wall Street, but many investment professionals are skeptical that the selling is over. One reason is that earnings expectations for next year still show solid growth, which would be unlikely in the event of a recession.
"We know that if we start seeing a turnaround in the 2-year yields ... and if we start seeing a turnaround in the dollar, that gives us the ability to bounce from these extremely oversold conditions," said Andrew Smith, chief investment strategist of Delos Capital Advisors in Dallas. "But I have a hard time reconciling in my mind that the earnings story is going to be as good as we expect."
Additionally, the dramatic moves in the bond and currency markets means that "something broke" and it may be smart to wait for that information to shake out, Smith said.
On the positive side, Smith pointed to a strong labor market and signs of continued spending on travel as a sign that the U.S. economy may be able to avoid a major recession.
— Jesse Pound
U.S. 10-year yield closes in on key 4% level
The 10-year Treasury yield is edging close to 4%, a level it has not touched since 2010.
The U.S. 10-year is the benchmark yield that sets the course for home mortgage rates and other consumer and business loans. It has bounded higher this week, as U.K. gilt yields race higher and on expectations of an aggressive Federal Reserve.
The yield was at 3.96% in afternoon trading. The 10-year yield reversed an earlier decline and gained about basis points. (A basis point equals 0.01 of a percentage point)
"It's definitely been impressive, and I just think no one is yet willing to step in and catch the falling knife," said Ben Jeffery of BMO. He added a lack of liquidity has also been pushing up yields, which move opposite price.
Jeffery said the yield was also moving higher ahead of the 1 p.m. auction of 5-year notes.
He said the 10-year tested the 4% level in 2010. "The last time we were sustainably above 4% was 2008. There's another technical level at 4.10% and then there's not much of note until 4.25%," he said.
— Patti Domm