© Reuters. FILE PHOTO: HKEX Mark can be seen at China International Services Trade Fair in Beijing 2020
From Swati Pandey
SYDNEY (Reuters) – Asian stocks retreated from all-time highs on Friday as higher longer-term bond yields and overwhelming US data hurt investor confidence in a faster economic recovery from the COVID-19 pandemic, while gold hit a seven-month low reached.
MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan recently fell 0.1% to 733.67 from a record high of 745.89 hit on Thursday.
The index is on the way to a small weekly loss after two consecutive weeks of profit.
Since the beginning of the year, the index has risen by almost 10.5%, largely due to loose monetary and fiscal policies around the world.
On Friday, the Australian benchmark fell 0.8% while it fell 0.4%.
Chinese stocks were in the red with the blue-chip CSI300 down 0.6%.
“The recent surge in longer-term core returns appears to be weighing on investors,” said Rodrigo Catril, forex strategist at National Australia Bank (OTC :).
Core bond yields have risen around the world, led by so-called “reflation trading,” where investors look to stimulate growth and inflation. Successful launches of coronavirus vaccines to date and hopes of massive budget spending under US President Joe Biden have spurred the reflation trade.
The German 10-year yield hit its highest closing price since June on Thursday, the UK 10-year yield traded at a 10-month high of 0.65%, and US Treasury bond yields are hovering near the one-year high at 1.3%, a major factor that supports the US dollar.
Rising bond yields made gold less attractive. Spot prices hit a seven-month low of $ 1,766 an ounce on Friday.
While rising yields weighed on investor sentiment, “disappointing US unemployment figures didn’t help either,” added Catril.
An unexpected increase in the number of Americans seeking unemployment benefits depended heavily on the outlook. The Department of Labor reported that initial jobless claims rose by 13,000 to 861,000, raising skepticism about how quickly the US economy could recover from the global pandemic.
In addition, US home starts fell 6.0% in January, the first decline in five months.
On Wall Street, the Dow fell 0.38%, the lost 0.44% and the Dow 0.72%.
In currencies, the dollar remained stable with an index of 90.568.
The pound hit its highest level in over three years at $ 1.3965, led by the successful introduction of vaccines in the country, which has already vaccinated 16.5 million people. It’s on track for a sixth straight weekly increase. ()
The euro is facing a small weekly loss. The single currency was most recently at USD 1.2085.
The risk-sensitive Australian dollar was on its way to a third straight spike a week, most recently trading at $ 0.7762.
In commodities, oil markets saw some profit-taking after days of gains driven by a freezer across Texas that weighed on production. [O/R]
fell $ 1.17 to $ 62.76 a barrel. US West Texas Intermediate (WTI) crude oil futures were down $ 1.37 to $ 59.15 a barrel.
rose nearly 3% to its highest level since April 2012 on Thursday, led by demand from Chinese investors who had returned from a week-long vacation.