U.S. stock futures resumed descent in early Asian trade and Asian shares were seen on the defensive on Wednesday as monetary easing by China’s central bank had limited success in cheering up nervous investors.
U.S. S&P 500 mini futures fell 0.7 percent to 1,858.75, edging closer to Monday’s 10-month low of 1,831.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent while Japan’s Nikkei was flat in early trade, with the focus on Chinese share markets’ reaction to the latest stimulus.
The People’s Bank of China cut interest rates and lowered the amount of reserves banks must hold for the second time in two months on Tuesday, ratcheting up support for a stumbling economy and a plunging stock market
The move, which came after Chinese share prices nosedived more than 15 percent in the last two days, initially boosted world share prices but the impact did not last long.
Major U.S. stock indexes reversed all their gains, with the S&P 500 ending down 1.4 percent after giving up gains of as much as 2.9 percent earlier in the day.
“Monetary easing may be effective in prompting buy-back in ‘oversold’ risk assets but it is not enough to brighten the economic outlook, which market players are concerned about,” said Makoto Noji, senior rates strategist at SMBC Nikko Securities.
“When China is curtailing excessive investments, monetary stimulus would not boost China’s demand much. Rather if it ends up weakening the yuan, it would fuel competition in devaluation. There’s no wonder U.S. stocks have lost steam,” he added.
The CBOE Market Volatility Index, at 36, was still elevated, indicating significant uncertainty, even though it was below the previous day’s peak of 53.3, which was the highest level since January 2009.
In the currency market, the dollar also lost steam as traders flocked to save-haven currencies such as euro and yen.
The euro was $1.1529, little changed from late U.S. trade, but more than a full cent above Tuesday’s low of $1.1396.
The dollar also slipped back to 118.90, failing to maintain its brief foray above the 120 mark.
Emerging market currencies remained under pressure, with the Brazilian real falling 1 percent to a fresh 12-year low of 3.59 per dollar as investors worried about a deep economic recession and a growing political crisis in Latin America’s largest economy.
Commodity prices managed to hover a tad above multi-year lows hit earlier in the week, but concerns softer demand from China could lead to oversupply kept a tab on them.
Brent crude futures last traded at $43.36 per barrel, about a dollar above 6 1/2-year low of $42.23 touched on Monday.
The price of copper, often considered a proxy for global economic activity because of the metal’s extensive use, rose 2.3 percent to $5,065 per tonne.