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* Asian scholarships: https://tmsnrt.rs/2zpUAr4
* Asian markets retreat overall, S&P futures reduce losses
* Apple and Facebook slip despite optimistic results
* Talk about troubled sales by hedge funds as shorts tightened
* The dollar gets a safe haven offer as the euro retreats
By Wayne Cole
SYDNEY / NEW YORK, Jan.28 (Reuters) – Asian stocks slipped on Thursday, as the safe-haven dollar rebounded in the form of a sudden sell off on Wall Street and delays with coronavirus vaccines served as a pretext for record profits on recent big gains.
The largest MSCI index of Asia-Pacific stocks outside of Japan slipped 1.8%, with valuations looking stretched as the index rose more than 6% this month.
The Japanese Nikkei fell 1.3%, its biggest drop since October, and Chinese blue chips fell 2.4% as liquidity tightened ahead of the Lunar New Year holiday.
South Korea was down 1.7% on losses from Samsung after posting profits.
Even tech darlings were not immune to Facebook’s downturn despite profits far exceeding expectations. Apple Inc also beat forecasts, but its shares lost 3% after the bell.
There was a hint of resilience as US equity futures slashed large early losses, leaving Eminis for the S&P 500 at 0.2% and NASDAQ futures at 0.3%. EUROSTOXX 50 futures plunged 0.3% and FTSE futures fell 0.7%.
There was no obvious trigger for the rout, rather many seemed to have rushed for exits at the same time in a market that had been priced to perfection.
Dealers have said heavily indebted investors are taking profits where they can to cover losses elsewhere, leading to sharp drops in many crowded deals.
Some have pointed the finger at retail investors who had imposed massive squeeze on hedge funds with short positions in stocks such as GameStop.
GameStop and several other high-buying stocks then retreated in extended trading after Reddit briefly restricted access to its popular WallStreetBets site.
“The Reddit army is expected to prepare for stricter rules and regulations soon, which should kill the idea that what happened with GameStop will happen with others,” said Edward Moya, analyst at senior market at OANDA.
MOOD CHANGES
Enduring optimism that vaccines would cure the global economy in just a few months has been sorely tested by the emergence of new variants and problems with vaccine distribution in the United States and Europe.
Dealers noted that the market has also chosen to focus more on an unfavorable economic outlook from the Federal Reserve overnight than on its promise to continue supporting policy.
“The Fed’s recognition of a slowing pace of recovery and reliance on vaccine deployment is not news, but it does provide equity investors with some reality, pushing back the timing of the recovery, ”said Rodrigo Catril, a senior FX strategist at NAB.
The sudden change in mood caused 10-year Treasury yields to drop 3 basis points overnight to 1.01%, well above the recent high of 1.187%.
The safe haven US dollar rose significantly, with its index rising to 90.753 from the January low of 89.206. The dollar strengthened to 104.33 yen and moved away from the week’s low of 103.54.
The euro fell back to $ 1.2090 as the European Central Bank felt markets undervalued the risk of further rate cuts.
Commodity-linked currencies were hit by all the economic angst, with the Australian and New Zealand dollars losing more than 1% overnight.
The rebound in the dollar kept gold prices soft around $ 1,836 an ounce.
Global demand is worried about limiting oil prices despite a huge drop in crude inventories in the United States. US crude fell 25 cents to $ 52.60 a barrel, while Brent futures fell 33 cents to $ 55.48.
(Additional reporting by Alwyn Scott; Editing by Christian Schmollinger and Ana Nicolaci da Costa)
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