Asian stocks fall as Delta fears bullish Wall Street eclipse
HONG KONG, Aug. 12 (Reuters) – Asian stocks retreated on Thursday as concerns over Chinese regulatory changes and the spread of the Delta variant of the coronavirus weighed on sentiment despite fears of easing US inflation that the Federal Reserve is rushing to reduce its support.
Those consumer price inflation figures also pushed the dollar down against most major currencies and US Treasury yields fell slightly overnight, although both were more stable in Asian hours.
The largest MSCI Asia-Pacific equity index outside of Japan (.MIAPJ0000PUS) fell 0.51% early in the session, led by a 0.79% drop in Chinese bluechips (.CSI300) and a Hong Kong benchmark (.HSI) drop 0.54% as lower – Mainland lending data triggered liquidity problems.
Chinese online insurer ZhongAn (6060.HK) fell 13.47% after state media said China’s banking and insurance regulator will step up monitoring of the country’s online insurance companies. L4N2PJ14V
Nervous traders were quick to respond to remarks from Chinese media and state officials, after many were surprised by new, stricter-than-expected rules last month for the private tutoring industry, one of the numerous regulatory crackdowns that have rocked the sectors from tech to real estate.
China’s growth is slowing and recent regulatory oversight issues have presented headwinds for investors with broader region-wide implications. The spread of the Delta variant is also of concern given the low rate. (in Asia), “said David Chao, Global Market Strategist, Asia-Pacific. (ex-Japan) at Invesco.
The Japanese Nikkei (.N225) reversed the trend, up 0.35%, and was heading for a fifth straight session of gains, supported by strong earnings from domestic companies.
US equity futures were little changed, with S&P 500 e-minis down 0.05% and Euro Stoxx 50 pan-regional futures down 0.01%.
The weaker performance of Asian benchmarks contrasts with the situation elsewhere. On Wednesday, the MSCI All Country Index (.MIWD00000PUS), an indicator of stocks across the world, hit a record high.
By comparison, the Asian benchmark is down more than 10% from its February high.
“Silver is only found in the US and European markets right now, and it’s also our preferred market,” said Daniel Lam, senior cross-asset strategist, Standard Chartered Wealth Management.
Lam pointed to a strong income season in the United States and high vaccination rates in the United States and Europe, which meant that the spread of the Delta variant of the new coronavirus had less economic impact than in Asia.
The Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) closed at record highs on Wednesday, after the release of figures showing the consumer price index rose 0.5% last month , the largest month-over-month decline in inflation in 15 months, allaying concerns about the potential for soaring inflation.
U.S. policymakers are publicly discussing how and when they should start cutting back on massive asset purchases launched by the Fed last year to stabilize financial markets and support the economy during the coronavirus pandemic. Read more
The easing of inflation fears is reducing the pressure to cut back on those asset purchases soon rather than later in the year, after last week’s good jobs numbers gave ammunition to those with a more hawkish inclination.
As a result, US Treasury yields fell on most maturities on Wednesday, although trading was choppy.
Benchmark 10-year Treasury yields were last 1.3472%, against a US close of 1.359%.
The dollar hovered below a four-month peak against its major peers on Thursday, after falling overnight as yields fell.
Oil largely held onto the gains from the start of the week, with US crude falling 0.03% to $ 69.23 per barrel. Brent crude remained stable at $ 71.43 per barrel.
Gold also held onto its gains overnight, with the spot price falling 0.1% after rising 1.3% in the previous session. Allaying fears about higher interest rates would generally help the non-interest bearing asset.
Editing by Stephen Coates
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