Stocks

Asian shares, US yields rise as investors reassess rout

Reuters Shanghai | Updated on July 21, 2021

Dollar remains firm on concerns over fast spreading virus variant

Asian shares and US Treasury yields rose on Wednesday, clawing back some of the week's losses as investors reassessed economic worries, but the dollar was firm on concerns over the impact of a fast-spreading coronavirus variant.

Rising COVID-19 infections have rocked global markets this week as investors dumped risk assets, seeking stability in safe haven assets like bonds. That sent stocks tumbling and pushed the benchmark US 10-year yield to five-month lows on Tuesday.

But on Wednesday, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.17 per cent, trimming its losses for the week to around 2 per cent, while Japan's Nikkei rose 0.90 per cent after touching six-month lows a day earlier.

Sentiment in Japan was supported by a jump in exports in June, led by US demand for cars and China-bound shipments of chip-making equipment, boosting hopes for an export-led recovery.

Australian shares were up 1.21 per cent, Chinese blue-chips added 0.76 per cent and Taiwan shares rose 0.27 per cent.

Seoul's KOSPI slipped 0.14 per cent as South Korea reported a daily record of novel coronavirus cases.

"The level of volumes, the level of sporadic whip-saw price action I think is telling you that there's not a lot of conviction one way or another," said Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore.

But while he said peak global growth had likely passed, easy central bank policies continue to provide strong support for global asset prices even as they begin to flag the tapering of asset purchases.

"The G4 central banks' balance sheets have been compounding by 15 per cent since 2008. And my point is that's not going to stop. It's not going to get shut off."

On Tuesday, the Dow Jones Industrial Average rose1.62 per cent to 34,511.99 points, the S&P 500 gained 1.52 per cent to4,323.06 and the Nasdaq Composite added 1.57 per cent to14,498.88.

The rise in share market gauges in Asia on Wednesday was matched by a fall in US Treasuries prices, with the 10-year yield rising to 1.2202 per cent from the previous day's close of 1.209 per cent. The 2-year yield was at 0.2036 per cent, up from a close of 0.194 per cent.

But pointing to persistent worries around the impact of a surge in global COVID-19 infections, the dollar stayed near three-month highs on Wednesday.

"While some of the world is shrugging off rising infections as vaccination rates limit the severity of any symptoms of new cases, there are few parts of the world that can totally ignore this," said Rob Carnell, Asia-Pacific chief economist at ING.

Currency and commodity

The dollar index edged up 0.07 per cent to 93.030, with the euro down 0.07 per cent to $1.1771. The dollar was 0.05 per cent stronger against the yen at 109.90.

Oil prices resumed falls after a rebound on Tuesday, with US crude down 0.4 per cent at $66.93 per barrel and Brent at $69.12, down 0.33 per cent on the day.

Spot gold shed 0.21 per cent to $1,806.24 an ounce.

Published on July 21, 2021

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