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Malaysia

Asian shares fall despite strong Wall Street, oil retreats

The biggest regional loser in Asia is South Korea's Kospi, which fell 1 per cent. — Reuters pic
The biggest regional loser in Asia is South Korea's Kospi, which fell 1 per cent. — Reuters pic

SHANGHAI, April 24 — Equity markets in Asia faltered today amid losses in South Korea and uncertainty over China's plans for further stimulus as the economy shows signs of regaining its footing.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3 percent lower, erasing early gains in the wake of record closing highs on Wall Street overnight.

European indexes were also expected to weaken.

In early European trading, pan-region Euro Stoxx 50 futures were down 0.29 per cent at 3,426, German DAX futures fell 0.28 per cent at 12,234 and FTSE futures were down 0.21 per cent at 7,451.

In Asia, the biggest regional loser was South Korea's Kospi, which fell 1 per cent.

Investors shrugged off the government's proposed supplementary budget aimed in part at supporting exports, and worried after chipmaker Texas Instruments said it expects a slowdown in demand for microchips could last a few more quarters.

Shares of Samsung Electronics were down 1.6 per cent.

“Texas Instruments has published some good results but has poured a little bit of cold water on what's going to happen in the second half of the year,” said Frank Benzimra, head of Asia equity strategy at Societe Generale.

Chinese equities flitted between gains and losses as investors debated whether Beijing would slow the pace of policy easing following stronger-than-expected first-quarter economic growth.

The blue-chip CSI300 index was last down about 0.1 per cent after earlier falling as much as 1.3 per cent.

China's central bank is likely to pause to assess economic conditions before making any further moves to ease lenders' reserve requirements, after the growth data reduced the urgency for action, policy insiders said.

Australian shares outperformed the rest of the region, jumping as much as 1.1 percent to a more-than-11-year high after a sharp slowdown in Australian inflation raised the likelihood of an interest rate cut.

Annual CPI inflation in Australia fell to 1.3 per cent in the March quarter, from 1.8 per cent in the previous period, the lowest since 2016.

Japan's Nikkei stock index ended down 0.3 per cent.

The mixed day in Asia came after upbeat earnings from Coca-Cola, Twitter, United Technologies and Lockheed Martin helped the Nasdaq and S&P 500 indexes reach record closing highs on Wall Street overnight.

The Dow Jones Industrial Average rose 0.52 per cent to 26,647.97, the S&P 500 gained 0.91 per cent to 2,934.31 and the Nasdaq Composite added 1.35 per cent to 8,123.25.

Analysts said that alongside better-than-feared corporate earnings, a more supportive policy environment has helped to boost risk appetites.

“The Fed has been joined in its dovish tilt by major central banks across the globe ... the tilt globally reflects genuine concern not to allow individual countries and the globe to tip into recession. That risk has receded,” Greg McKenna, strategist at McKenna Macro in Australia, said in a note to clients.

But after rising early today, S&P 500 e-mini stock futures were down 0.12 per cent at 2,934.5.

Equity market gains had been bolstered yesterday by rising energy shares after Brent crude, the global benchmark, hit its highest level since November 1.

Oil prices surged after the United States ended six months of waivers that allowed Iran's eight biggest buyers, most of them in Asia, to continue importing limited volumes of Iranian oil.

Gulf Opec members said that rather than offset any shortfall resulting from the US decision on waivers, they would raise output only if there was demand.

Today, Brent gave up some gains, trading down 0.34 per cent at US$74.26 (RM306.36) per barrel. US crude dipped 0.39 to US$66.04 a barrel.

Steeper yield curve

US Treasury yields declined alongside most Asian equities. Benchmark 10-year Treasury notes yielded 2.5541 per cent compared with a US close of 2.57 per cent yesterday, while the two-year yield, slipped to 2.3458 per cent, compared with a US close of 2.364 per cent.

While US Treasury yields ticked lower, a steepening of the US yield curve indicated a persistent bullish outlook for the US economy.

The spread between two- and 10-year Treasury note yields widened to as much as 21.5 basis points this morning, a new high for the year. It last stood at 20.6 basis points.

The yield curve steepens when longer-dated yields rise faster than shorter-dated yields, suggesting bullish investor sentiment.

The US dollar index, which tracks the greenback against a basket of six major rivals, was flat at 97.644, near a 22-month high, following strong US housing data.

The US dollar was 0.4 per cent weaker against the yen at 111.81, while the euro dropped 0.14 per cent to buy US$1.1209.

Spot gold fell about 0.2 per cent as the US dollar strengthened, with one ounce fetching US$1,269.92. — Reuters

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