Asian stocks off to a muted start as investors digest US yields, Wall Street declines

FAN Editor

Asian stocks were narrowly mixed on Monday, with Japan and South Korea getting off to a muted start after U.S. markets posted Friday losses amid declines in technology stocks.

The Nikkei 225 was flat in early trade while the broader Topix drifted higher by 0.21 percent. Among sectors, financials, shippers and automakers traded in positive territory, while technology was a mixed bag.

Elsewhere, the Kospi was off by 0.08 percent, with automakers and retailers declining as steelmakers climbed. In Australia, the S&P/ASX 200 advanced 0.28 percent, with all sectors except the telecommunications subindex in the green.

The mixed performance in Asia followed declines in U.S. stock indexes on Friday amid a fall in Apple shares, which pushed the technology sector lower. Apple tumbled 4.1 percent following a Morgan Stanley note said iPhone sales in the June quarter would miss expectations.

Investors also had their eye on the strong showing seen stateside this earnings season, with 81.5 percent of S&P 500 companies reporting as of Friday better-than-expected earnings, according to FactSet.

Also of note was the move higher in U.S. Treasury yields, which has in turn supported the dollar. The yield on the 10-year Treasury note crept higher to 2.96 percent on Friday, its highest level since Jan. 10, 2014. Meanwhile, the two-year yield rose to its highest level in almost 10 years.

“While the Fed’s tightening cycle would be expected to cause some flattening pressure, too much can put the brakes on as an inverted yield curve may suggest investors are losing confidence in the outlook, preferring to accept a lower yield for a longer duration than risk short term rates falling if the economy tanks,” said ANZ analysts in a morning note.

“As the Fed continues to lift its target rate, the curve is definitely one to keep an eye on.”

Asian stocks had ended the last session with moderate losses after technology shares in the region took a hit on the back of weak guidance from Taiwan Semiconductor Manufacturing (TSMC) on Thursday.

The dollar index, which tracks the U.S. currency against a basket of currencies, was steady at 90.417. Against the yen, the greenback firmed to trade at 107.84 by 8:12 a.m. HK/SIN, from levels around 107.65 seen at the end of the last session.

On the commodities front, oil prices were slightly softer. U.S. West Texas Intermediate crude shed 0.25 percent to trade at $68.23 per barrel and Brent crude futures edged lower by 0.19 percent to $73.92.

On Friday, oil prices had initially slid on the back of President Donald Trump’s comments on Twitter that OPEC was keeping crude prices “artificially Very High,” before recovering and settling slightly higher.

Here’s the economic calendar for Monday (all times in HK/SIN):

  • 1:00 p.m.: Singapore consumer price index
  • 4:00 p.m.: Taiwan retail sales, unemployment rate
  • 4:30 p.m.: Hong Kong CPI

— CNBC’s Fred Imbert contributed to this report.

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