Asian stocks drift lower as US yields renew two-year high, China equities portray trade fears
- Asia-Pacific shares trade mixed as Sino-American trade tussles battle US-Japan optimism and covid headlines amid quiet session.
- Foreign outflows from Asian equities jumped to seven-month high in January.
- China’s blue-chip index hits 19-month low on fears of US sanctions, New Zealand witnesses harsh vaccine protests.
- Mixed Aussie data shrug off RBA rate hike concerns to favor ASX bulls, Indian markets remain mildly offered.
Markets in the Asia-Pacific region print cautious sentiment during early Tuesday on fresh US-China trade fears, as well as firmer US Treasury yields.
The US 10-year Treasury yields rose around three basis points (bps) to refresh the two-year high near 1.95% whereas the five-year counterpart added four bps to renew the 18-month peak of 1.8050% at the latest.
On the other hand, the Sino-American trade tussles escalate as the US conveyed China’s inability to match Phase 1 commitments. “China's blue-chip index slumped to a 19-month low on Tuesday, with new-energy vehicle stocks leading the losses, as investors fretted over the prospect of the U.S. government adding more Chinese entities to the export control list,” said Reuters in this regard.
Amid these plays, MSCI’s index of Asia-Pacific shares ex-Japan drop half a percent while Japan’s Nikkei 225 added 0.30% intraday by the press time.
Talking about data, Japan’s Overall Household Spending dropped to -0.20% YoY in December versus +0.3% forecast and -1.3% prior. On the same line were Current Account details for December, ¥-370.8B versus market consensus of ¥73.5B and ¥897.3B previous readouts. Though, the Trade Balance - BOP Basis improved to ¥-318.7B from ¥-431.3B during the stated month.
Elsewhere, National Australia Bank’s (NAB) Business Conditions and Business Confidence for January marked mixed figures with the Business Conditions easing to 3 versus a forecast of 4 and 8 previous. On the other hand, the NAB Business Confidence recovered from -12 to 3, versus 0 forecast.
On a different page, escalating vaccine protests in New Zealand test NZX 50 bulls whereas a seven-month high outflow of the foreign equities from Asian stocks challenge the overall market sentiment in the bloc.
It should be noted that the US Dollar Index (DXY) benefits from firmer yields whereas the commodities print losses at the latest.
Moving on, market players await Thursday’s European Commission Economic Forecasts and the US Consumer Price Index (CPI) for better understanding. Though, the aforementioned risk catalysts and the US Goods and Services Trade Balance for December, expected $-83B versus $-80.2B, may offer intermediate directives.
Read: US T-bond yields, S&P 500 Futures print mild gains amid cautious optimism