- MSCI ex-Japan slips for second consecutive day
- Japan’s Nikkei starts the week in red territory
- The Japanese yen appreciates against the US dollar
- Gold holds above $ 1,800 an ounce
SYDNEY, July 19 (Reuters) – Asian stocks fell again on Monday as assets perceived as safe havens, including the yen and gold, edged up as investors’ appetite for risk was soured by investors. fears of rising inflation and a relentless rise in coronavirus cases.
The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.4% for its second consecutive day of losses.
Japan’s Nikkei (.N225) fell 1.3%, as did Australia’s benchmark stock index (.AXJO). South Korea’s KOSPI (.KS11) was down 1% while New Zealand stocks were down 0.4%.
Global economic growth is starting to show signs of fatigue as many countries, particularly in Asia, struggle to curb the highly contagious Delta variant of the coronavirus and have been forced into some form of lockdown. The specter of high inflation, which the market has long feared, also haunts investors.
Economists at Bank of America lowered their forecast for economic growth in the United States to 6.5% this year, from 7% previously, but maintained their forecast of 5.5% for next year.
“When it comes to inflation, the bad news is that it will likely stay high in the near term,” they said in a note, highlighting their last reading of their proprietary inflation meter which remains high.
“The good news is … we’re probably near the peak, at least for the next few months, as base effects are less favorable and scarcity pressures shift from goods to services.”
US Federal Reserve Chairman Jerome Powell has repeatedly stated that any acceleration in inflation should be transient, indicating that monetary policy will remain favorable for some time to come. Read more
However, it is difficult to convince the markets.
Aviva Investors, the global asset management division of Aviva plc, expects rapid growth and inflation to put upward pressure on long-term sovereign bond yields.
“As such, we prefer to be somewhat underweight in duration, primarily via US Treasuries,” said Michael Grady, head of investment strategy and chief economist at Aviva Investors. “Overall, we have a neutral view on currencies.”
Action in the currency market was stifled on Monday.
The dollar barely changed against a basket of major currencies at 92.640.
Against the safe haven yen, the dollar lost 0.2% to 109.86, approaching the recent one-month low of 109.52.
The euro was broadly stable at $ 1.1811.
The risk-sensitive Aussie slipped to $ 0.7392, the lowest since last December at the start of Asian trading.
The performance of equities in recent days has stressed the nerves of investors.
For example, MSCI’s All Country World Index (.MIWD00000PUS), a gauge of global stocks, hit a record high last week but ended it down 0.6%. The Dow (.DJI) closed 0.9% lower, the S&P 500 (.SPX) slipped 0.75% and the Nasdaq (.IXIC) lost 0.8%.
The losses came despite stronger-than-expected US retail sales last week, which rose 0.6% in June, contrary to an expected decline.
Next on the investor radar are June quarter corporate earnings with Netflix (NFLX.O), Philip Morris (PM.N), Coca Cola (KO.N) and Intel Corp (INTC.O) among the companies. who are expected to publish their report this week.
Bank of America analysts are forecasting an 11% rise in earnings, which they say will help rekindle investor confidence in a broader economic recovery and bring back a rotation to so-called “value” stocks. are currently trading below their true value.
Elsewhere, gold, an asset seen as a safe haven, rose with spot prices at $ 1,815.4 an ounce.
Oil extended the losses as Brent crude fell 55 cents to $ 73.04 a barrel. US crude slipped 41 cents to $ 71.40 a barrel.
Editing by Shri Navaratnam
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