Asian markets were showing some signs of composure on Wednesday morning, with Chinese stocks advancing despite MSCI’s decision not to include them in its emerging market indices and Japanese shares receiving some respite from a weaker yen.

However, there was still an air of nervousness about, with demand for government bonds again pushing yields to record lows.

Despite falling by more than 1 per cent at the open, China’s Shanghai Composite recovered to be up half of one per cent, while the technology-focused Shenzhen Composite gained 1.6 per cent in the wake of MSCI’s decision to again delay the inclusion of A-shares in its emerging markets benchmark, which is followed by $1.5tn of global funds.

Hong Kong’s Hang Seng was down 0.2 per cent, while Australia’s S&P/ASX 200 was down 0.3 per cent.

Japanese stocks were on track to end a four-day losing streak. The broad Topix recovered from early declines to be up 0.9 per cent, and the Nikkei 225 gained 0.7 per cent as the yen looked to weaken for the first time in four sessions, down 0.1 per cent at ¥106.24 per dollar.

Amid another broad market sell-off overnight, investors clambered for the relative safety of government bonds. That pushed the yield (which moves inversely to price) on the German 10-year bund to a record low minus 0.033 per cent, although equivalent US treasuries reversed course, with yields edging higher.

In Asia today, the yield on the Japanese government 10-year bond hit a record low of minus 0.182 per cent, as did the Australian government 10-year bond yield, which was as low as 2.034 per cent.

Yields on UK 10-year gilts hit a record low 1.111 per cent on Tuesday amid ongoing concern about the outcome of Britain’s upcoming June 23 referendum on European Union membership. Some polls have shown momentum shifting toward the “leave” camp, which could disrupt markets and prompt the Bank of England to hold off on potential rate rises.

The pound recovered 0.1 per cent to $1.4134 on Wednesday after a 1.1 per cent drop in the previous session and ahead of the Bank of England’s monetary policy decision on Thursday.

The Bank of Japan is also slated to hand down its policy decision tomorrow, but not before the Federal Reserve, which concludes its two-day meeting on Wednesday. The US central bank is expected to keep interest rates on hold after recent data showed the economy added fewer jobs in May than expected. Rising nervousness in markets about Brexit may also influence the Fed’s decision to stand pat.

The dollar index, a measure of the US currency against a basket of global peers, was flat at 94.961 today, but had gained 0.6 per cent overnight. Gold, which is sensitive to interest rate expectations, was down 0.1 per cent at $1,284.12 and facing its first decline in six sessions.

The jump in the dollar overnight had put downward pressure on China’s renminbi, prompting the People’s Bank of China to fix the reference rate for the Chinese currency 0.3 per cent lower at Rmb6.6001, its lowest level since January 13 2011.

Oil markets continued to slide amid the broad global sell-off, and were eyeing their fifth-straight day of declines, which would be the longest losing streak since February. Brent crude, the international benchmark, and West Texas Intermediate, the US marker, were both down 1.6 per cent at $49.05 and $47.73 a barrel, respectively.

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