Asian stocks fall as Delta fears bullish Wall Street eclipse

HONG KONG, Aug.12 (Reuters) – Asian stocks failed to keep up with a strong close on Wall Street as fears over the spread of the Delta variant of the coronavirus weigh on sentiment even as inflation is brought under control US has eased fears that the Federal Reserve is rushing to reduce its economic support.

This data also pushed the dollar down against most major currencies, and US Treasury yields fell slightly overnight, although both were more stable in Asian hours.

The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.25% early in the session, led by a 0.24% drop in Chinese bluchips (.CSI300). The Hong Kong benchmark (.HSI) fell 0.2% while Australian stocks (.AXJO) were largely flat and Japan’s Nikkei (.N225) rose 0.35% .

US equity futures were little changed, with S&P 500 e-minis down 0.02%.

The weaker performance of Asian benchmarks contrasts with the situation elsewhere in the world. On Wednesday, the MSCI All Country Index (.MIWD00000PUS), an indicator of stocks across the world, hit a record high.

By comparison, the Asian benchmark is down more than 10% from its February high.

“Silver is only found in the US and European markets right now, and it’s also our preferred market,” said Daniel Lam, senior cross-asset strategist, Standard Chartered Wealth Management.

Lam pointed to a strong income season in the United States and high vaccination rates in Europe, which means the pace of reopening has been less affected by the spread of the Delta variant of the novel coronavirus and by the “recent blues of Chinese regulations ”in sectors such as education and technology.

“I think the rotation from emerging markets to western markets may continue in the near term,” said David Chao, global markets strategist, Asia-Pacific (ex-Japan) at Invesco.

“The APAC region’s zero tolerance policy coupled with a relatively low vaccination rate has led to a vicious lock-release cycle that may continue for some time. “

The Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) closed at record highs on Wednesday, after the US Department of Labor announced the largest drop in month-to-month inflation in 15 months, easing concerns about the potential for runaway inflation.

U.S. policymakers are publicly discussing how and when they should start cutting back on massive asset purchases launched by the Fed last year to stabilize financial markets and support the economy during the coronavirus pandemic. Read more

The easing of inflation fears is reducing the pressure to cut back on those asset purchases soon rather than later in the year, after last week’s good jobs numbers gave ammunition to those with a more hawkish inclination.

As a result, US Treasury yields fell on most maturities on Wednesday, although trading was choppy.

The movements were more discreet in Asian hours. Yields on the benchmark 10-year Treasury bill were 1.3455% from its US close of 1.359%.

The dollar hovered below a four-month high against its major peers on Thursday, after falling overnight as yields fell.

“I expect the dollar to be constrained by the recent high unemployment rate and moderate CPI data,” Chao said from Invesco.

Oil largely held onto the gains from the start of the week, with US crude falling 0.03% to $ 69.23 per barrel. Brent crude remained stable at $ 71.43 per barrel.

Gold also held onto its gains overnight, with the spot price falling 0.1% after rising 1.3% in the previous session. Allaying fears about higher interest rates would generally help the non-interest bearing asset.

Editing by Lincoln Feast

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