Asian shares hesitant after Wall Street sell-off, dollar buoyant
Asian shares were subdued on Thursday after Fitch downgraded U.S. sovereign debt sparking profit-taking, with investors now shifting focus to Bank of England's rate decision and earnings from Apple and Amazon. Both S&P 500 futures and Nasdaq futures added 0.2%, following a heavy wave of selling on Wall Street overnight.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2%, having also suffered a colossal drop of 2.3% just a day earlier. That compared with a 5.4% monthly gain in July. Japan's Nikkei fell 1.1%, bringing the losses so far in August to 2.5%, giving back some of the 7.5% surge seen a month earlier.
The yield on 10-year Japanese government bonds (JGB) rose to 0.65% on Thursday, the highest since April 2014, after the Bank of Japan loosened its grip on yield curve control last week. Chinese blue chips were 0.2% higher while Hong Kong's Hang Seng index was mostly flat. A private survey showed China's services activity expanded at a faster place in July.
«I reckon that even though you could argue that the Fitch downgrade is outdated… I think you've seen enough movements for some things to be burned and some questions to be asked at these highs,» said Matt Simpson, a market analyst at City Index in Brisbane. «I reckon at best you probably could look at some choppy trade around these highs or at worst we can have a bit of a deeper pullback.» Overnight, Nasdaq and S&P 500 posted their biggest declines since February and April, respectively, after a blistering July driven by better-than-expected earnings and hopes of a soft landing for the U.S. economy.[.N] Later in the day, Apple is expected to report the largest third-quarter drop in revenues since 2016 as sales of iPhones slow.
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