- Asian shares remain on the back foot despite pullback in global Treasury yields.
- RBA, RBNZ joined the Fed to placate reflation fears.
- US pushes China over phase one trade deal commitments, attacks Iran-backed military.
- US dollar fades recovery moves but commodities, Antipodeans stay pressured.
Asian equity bears ignore the recent bounce in the bond prices while portraying the sea of red during early Friday. In doing so, the risk barometer respects likely escalation in the US-China tension as well as Washington-Tehran tussle amid reflation fears.
That said, MSCI’s index of Asia-Pacific shares outside Japan drops over 2.20% whereas Japan’s Nikkei 225 declines 2.73% ahead of the European session. Japan’s equity markets couldn’t cheer recovery in the key data at home, like Retail Sales, Industrial Productions and Tokyo CPI, as a senior BOJ official cite downside risk to the economy.
Stocks from Australia and New Zealand also ignored efforts of the RBA and the RBNZ, via direct bond purchase and comments to favor prolonged easy money policy respectively. Further, Chinese markets also couldn’t benefit from hopes of a strong recovery and chatter surrounding no tax hikes as America warned Beijing to follow the phase one trade deal commitments.
Hong Kong’s Hang Seng and South Korea’s KOSPI lose over 2.5% whereas Indonesia’s IDX Composite and India’s BSE Sensex mark less than 1.0% downside while following the market sentiment.
It’s worth mentioning that the Treasury yields of Australian and New Zealand 10-year bonds ease from April 2019 peak while those from Japan step back after touching the highest levels since October 2018 earlier in Asia. Further, the US counterpart also eases from the yearly top to 1.477%, down four basis points (bps) by the press time.
Although bond rout seems to have taken a back-seat, for now, the market sentiment isn’t improved as the reflation fears stay on the card and so as the US covid stimulus. As a result, equity bears are likely to witness further happy days and may gain momentum should today’s US Core PCE data print escalated price pressure.