- Asian equities step back from record highs as reflation fears.
- Japan’s National CPI recovers, Aussie Retail Sales came in below forecasts for January.
- Fears of covid variants, US stimulus gridlock and downbeat data weigh on sentiment.
Shares in Asia remain sluggish after refreshing an all-time high during early Friday. Although market moves have been mostly quiet off-late, fears of liquidity crunch, due to the rising Treasury yields in the US and Japan, challenge the mood. Also on the negative side could be Japan’s finding of a fresh coronavirus (COVID-19) variant as well as the aftershocks of the downbeat US weekly jobless claims.
Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan drops 0.20% whereas Japan’s Nikkei 225 fails to cheer upbeat National Consumer Price Index (CPI) figures of -0.6%, versus -1.2% YoY prior, while flashing 0.75% intraday losses by press time.
Moving on, Australia’s ASX 200 also follows the suit, currently down 1.34%, as the preliminary readings of Aussie Retail Sales fall short of market consensus in January. New Zealand’s NZX 50 was on the same line as Treasury follows New Zealand Activity Index (NZAC) to convey that the recovery is starting to plateau.
Elsewhere, Chinese stocks struggle to defy the trend, but recently fail, while those from South Korea seem to hold mild gains amid vaccine optimism at home. Further, Indonesia’s IDX Composite and India’s BSE Sensex post small losses by press time.
On a broader front, US 10-year Treasury yields stay positive, up to one basis point (bp) to 1.296%, around the highest since February 2020. Japan’s 10-year yield has hit its highest since November of 2018. Bonds from Germany and Britain also refresh multi-month top.
Given the recent run-up in the global bond yields, investors fear liquidity crunch due to the higher rates, which in turn weigh on risks off-late. As a result, stock futures are offered recently.
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