Stocks struggled for traction in Asia on Wednesday and the dollar climbed as investors evaluated heightened US-China tension and hawkish Federal Reserve comments. Shares were mixed in Japan and fell in South Korea and Australia. S&P 500 and Nasdaq 100 futures slipped after a dip in Wall Street shares on Tuesday. Hong Kong contracts earlier pointed to the bourse there unwinding some of the losses sparked by worries over US House Speaker Nancy Pelosi’s Taiwan visit.

Treasuries mostly held a slide that’s pushed the two-year yield back past 3%. A chorus of Fed officials said the central bank has some way to go to get inflation under control, leading traders to trim wagers on policy easing next year. A dollar gauge added to its biggest gain in about three weeks. Some ebbing in the demand for havens from geopolitical risk pushed the yen lower.

The comments from Fed officials including Mary Daly, Loretta Mester and Charles Evans served to highlight the challenging backdrop of rising borrowing costs, price pressures and slowing economic growth confronting markets. San Francisco Fed President Daly said the Fed has “a long way to go” on reaching price stability around a 2% inflation target. Cleveland counterpart Mester said she wants to see “very compelling evidence” that month-to-month price increases are moderating.

“It’s hard to see any meaningful upside in equities right now,” Xi Qiao, managing director for global wealth management at UBS Group AG, said on Bloomberg Television. “The market is going to trade pretty mixed, stay choppy until we have a little bit more certainty.”

Missile Tests
China, which regards Taiwan as part of its territory, announced missile tests and military drills around the island after Pelosi became the highest-ranking American politician to visit in 25 years.

While market fears of an acute deterioration in ties between the US and China appear to have cooled, the ill-will highlights the risk of longer term economic decoupling with an array of potential impacts, such as stickier inflation as supply chains adjust, one that is highlighted by China’s decision to halt natural sand exports to Taiwan following the visit.

China’s Contemporary Amperex Technology Co. Ltd., the world’s biggest maker of batteries for electric vehicles, decided to push back announcing a multibillion-dollar North American plant to supply Tesla Inc. and Ford Motor Co. due to tensions raised by Pelosi’s trip to Taiwan, according to people familiar with the matter.

Elsewhere, oil fell below $94 a barrel as traders counted down to an OPEC crude production meeting. Gold retreated and Bitcoin dropped under $23,000. This week’s MLIV Pulse survey is asking about your outlook for corporate bonds, mergers and acquisitions and health of US corporate balance sheets through the end of the year. It takes one minute to participate in the MLIV Pulse survey, so please click here to get involved anonymously.

What to watch this week:

OPEC meeting on output, Wednesday
US factory orders, durable goods, ISM services, Wednesday
BOE rate decision, Thursday
US initial jobless claims, trade, Thursday
Cleveland Fed President Loretta Mester due to speak, Thursday
US employment report for July, Friday
Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.2% in Tokyo. The S&P 500 fell 0.7%
Nasdaq 100 futures shed 0.4%. The Nasdaq 100 fell 0.3%
Japan’s Topix index was little changed
South Korea’s Kospi index fell 0.2%
Australia’s S&P/ASX 200 index was down 1.1%
Euro Stoxx 50 futures fell 0.6%

Currencies

The Bloomberg Dollar Spot Index rose 0.2%
The euro was at $1.0151, down 0.2%
The Japanese yen was at 133.63 per dollar, down 0.3%
The offshore yuan was at 6.7744 per dollar

Bonds

The yield on 10-year Treasuries fell two basis points to 2.73%
Australia’s 10-year yield increased 10 basis points to 3.08%

Commodities

West Texas Intermediate crude was at $93.60 a barrel, down 0.8%
Gold was at $1,756.64 an ounce, down 0.2%