Asian shares down, set for worst month since March 2020

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Asian shares down, set for worst month since March 2020

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(Reuters)-30/07/2021

Asian shares slipped on Friday, with a gauge of regional equities set for its biggest monthly drop since the height of global pandemic lockdowns last March, while the dollar lagged near one-month lows on expectations of continued Fed stimulus.

The US posted strong second-quarter growth helped by rising vaccinations and government aid, but the expansion fell short of expectations.

Robust US earnings and forecasts also helped to lift Wall Street to record intraday highs on Thursday.

On Friday, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.84 percent, taking its losses for the week to more than 6.5 percent. Japan’s Nikkei dipped 1.71 percent, set for an 11th straight month of falls on the last trading day in the month.

Lower-than-expected revenue reported by Amazon.com Inc on Thursday, and the company’s forecast of slower sales growth in the coming quarters weighed on US stock futures early in the Asian trading day.

Nasdaq e-mini futures slid 1.35 percent and S&P 500 e-minis were down 0.82 percent.

Dollar in doldrums

After rising Thursday on US economic growth data, US Treasury yields pulled back, particularly toward the long end of the yield curve.

Benchmark 10-year notes last yielded 1.2509 percent, down from 1.269 percent late on Thursday, and the 30-year yield stood at 1.9001 percent, down from 1.916 percent on Thursday.

The spread between the US 10-year and 2-year yield narrowed to 104.5 basis points.

“We think bond yields now discount an unduly pessimistic view of the medium- to long-term outlook… The prospects for a robust recovery – and higher bond yields – are arguably much better,” analysts at Capital Economics said in a client note.

But following Fed Chairman Jerome Powell’s statement earlier this week that rate increases are “a ways away” and the job market still had “some ground to cover”, the dollar wallowed near one-month lows on Friday and was set for its worst week since May.

The dollar index was last up 0.09 percent at 91.967, with the euro down slightly at US$1.1879. The greenback was barely higher against the yen at 109.50.

In commodities markets, oil prices fell back after global benchmark Brent topped US$76 a barrel on tight US supplies.

Brent was down 0.53 percent at US$75.65 per barrel and US West Texas Intermediate crude traded down 0.52 percent at US$73.24.

Spot gold was flat at US$1,827.94 an ounce.