HONG KONG, July 28 (Reuters) - Asian shares stayed stuck at seven-month lows on Wednesday, as markets continued to digest a storm in Chinese equity markets, while currency markets were quiet with traders wary of placing large bets prior to the outcome of a Federal Reserve meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dropped 0.31% in morning trading. Markets in Hong Kong and mainland China stabilised after a sharp sell-off in the previous session, balancing declines elsewhere in Asia.
Asian shares have fallen in each of the three previous sessions as regulatory crackdowns in China roiled stocks in the technology, property and education sectors, leaving international investors bruised. read more
Chinese state-run financial media urged calm first thing on Wednesday morning, and while Chinese shares swung back and forth in early trading, they did not repeat the sharp plunges seen earlier in the week.
The embattled Hang Seng Tech Index (.HSTECH) was last flat, also after a volatile morning, a day after touching its lowest level since the index's creation in July 2020. It is still down about 40% from its February high.
U.S. stock futures, the S&P 500 e-minis , were flat.
"China and the Fed are the two key things for today," said Tai Hui, chief market strategist for Asia Pacific, at JPMorgan Asset Management.
"We are still trying to digest the news from China, what's going to be new is how the Fed view the latest round of (COVID-19) infections and whether they need to readjust their view," he said.
The statement from the Fed policy meeting, and a press conference from chairman Jerome Powell are due at 2 p.m. EDT (1800 GMT).
Markets will be watching closely for any hints on when the Fed will start reducing its purchases of government bonds and any fresh insight into its views on inflation and economic growth.
The declines in Asian equities on Tuesday spread to other markets overnight, causing Wall Street to retreat a little from the record highs set earlier in the week.
The Dow Jones Industrial Average (.DJI) ended Tuesday down 0.2%, the S&P 500 (.SPX) shed 0.5% and the Nasdaq Composite (.IXIC) slid 1.2%. Earlier, the pan-European STOXX 600 index (.STOXX) finished 0.54% lower.
After the U.S. close, Google parent Alphabet Inc (GOOGL.O), Microsoft (MSFT.O), and Apple (AAPL.O) all reported record quarterly earnings, though the smartphone maker's shares slid in after-hours trading on the back of a slower growth forecast. read more
In currency markets, the U.S. dollar sat below recent highs after a month-long rally, the safe-haven yen gained and the risk-sensitive Australian and New Zealand dollars dropped back.
Analysts at CBA attributed the moves to falling risk sentiment on the back of the Chinese regulatory crackdown.
The yield on benchmark 10-year Treasury notes rose a little to 1.2478% from a U.S. close of 1.234% on Tuesday.
Oil prices rose as industry data showed U.S. crude and product inventories fell more sharply than expected last week, outweighing worries about the consequences of surging COVID-19 cases. U.S. crude ticked up 0.73% to $72.17 a barrel and Brent crude rose 0.54% to $74.93 per barrel. Gold prices firmed above the key psychological level of $1,800, while Bitcoin rose around 1%, trading either side of $40,000.
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