Asian stocks pulled back from all-time peaks on Friday as higher longer-dated bond yields and underwhelming U.S. data dented investor confidence in a faster economic recovery from the COVID-19 pandemic, while gold hit a seven-month trough.
SYDNEY: Asian stocks pulled back from all-time peaks on Friday as higher longer-dated bond yields and underwhelming U.S. data dented investor confidence in a faster economic recovery from the COVID-19 pandemic, while gold hit a seven-month trough.
MSCI’s broadest index of Asia Pacific shares outside of Japan was last down 0.1per cent at 733.67 from a record high of 745.89 touched on Thursday.
The index is on track for a small weekly loss after two consecutive weeks of gains.
Since the start of the year, the index has surged nearly 10.5per cent largely led by easy monetary and fiscal policies around the world.
On Friday, Australia’s benchmark S&P/ASX 200 index was down 0.8per cent while Japan’s Nikkei fell 0.4per cent.
Chinese shares started in the red with the blue-chip CSI300 off 0.6per cent.
“The recent move up in longer dated core yields appears to be weighing on equity investors’ mind,” said Rodrigo Catril, forex strategist at National Australia Bank.
Core bond yields have pushed higher globally led by the so-called “reflation trade” where investors wager on a pick-up in growth and inflation. Successful coronavirus vaccine roll-outs so far and hopes of massive fiscal spending under U.S. President Joe Biden have spurred reflation trades.
Germany’s 10-year yield on Thursday posted its highest close since June, British 10-year yields traded at a 10-month top of 0.65per cent and U.S. Treasury yields are hovering near one-year highs around 1.3per cent, a large factor supporting the U.S. dollar.
Rising bond yields hurt the appeal of gold, with spot prices hitting a seven-month low of US$1,766 an ounce on Friday.