Shares in Hong Kong Kong swung between gains and losses before stabilising more than 1% lower after the Hang Seng Index on Monday suffered its worst day since the financial crisis. Mainland gauges also fell, following a record slump in US-listed Chinese stocks overnight as investors reacted negatively to President Xi Jinping tightening his control of government. 

An index of global equities rose fractionally after advancing over the past two days. Markets in Japan and Australia reflected gains in the US on Monday while futures for the S&P 500 edged lower. 

The offshore yuan fell to the lowest level since trading began a dozen years ago, as Xi’s power grab raised concern that concentrated decision-making could weaken growth and destabilise geopolitics. The decline extended after China’s central bank set the official fixing rate for the currency at the lowest level in 14 years.

“We’re certainly staying away from the Chinese market right now because the political scene is not favourable,” Laila Pence, president of Pence Wealth Management, said in an interview on Bloomberg TV. “There’s a lot less risk in the US and just as much upside.”

A fifth of S&P 500 companies have now posted third-quarter earnings with more than half outperforming estimates. Microsoft, Alphabet, Amazon.com and Apple report this week. The iPhone producer raised prices for its subscription music and TV services, citing higher input costs.

Manufacturing and services data for the US underwhelmed, indicating Federal Reserve rate hikes are beginning to slow activity. Fed officials have entered a blackout period ahead of the central bank’s meeting next week, where it’s expected to raise rates 75 basis points.

Elsewhere in markets, a gauge of the dollar slipped as traders speculated that the Federal Reserve may be approaching the end of its aggressive tightening campaign. Treasury 10-year yields fell back towards 4.20%, with yields also declining in Australia and New Zealand.

Oil steadied as traders assessed near-term supply tightness in the crude market and broad appetite for risk assets including commodities. Gold was also steady in Asia.