Asian shares lower as investors mull earnings, yields weigh

FAN Editor

Asian shares were mostly lower Friday as investors evaluated the latest earnings reports while worries about rising U.S. bond yields weighed on sentiment.

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KEEPING SCORE: Japan’s benchmark Nikkei 225 sank 0.7 percent to 23,313.13 and South Korea’s Kospi fell 1.7 percent to 2,525.09. Hong Kong’s Hang Seng index dipped 0.1 percent to 32,609.02 and the Shanghai Composite index slipped 0.3 percent to 3,435.46. Australia’s S&P/ASX 200, however, added 0.5 percent to 6,106.70. Taiwan shares rose while Southeast Asian indexes were mixed.

EARNINGS: Investors were digesting a full plate of corporate earnings with plenty more on the way. Among the latest, Amazon reported quarterly profit soared past $1 billion for the first time but Google parent Alphabet said it swung into a $3 billion loss because of a U.S. tax overhaul. Automaker Honda is due to report third quarter earnings Friday while Nissan and Toyota are expected next week, as are China trade figures, which will give the latest update on the world’s No. 2 economy.

YIELDS: The yield on U.S. 10-year Treasury notes, which are the benchmark for interest rates, has risen swiftly, stoking investor concerns that higher rates could weigh on company earnings and equity prices. This week yields hovered at their highest level since April 2014, fueled by the prospect of stronger economic growth in the U.S. and abroad.

MARKET VIEW: “U.S. and global shares had become overbought and overdue a decent correction, which in turn will impact Australian shares” said Shane Oliver, head of investment strategy at AMP Capital. The rise in bond yields is “likely providing the trigger and it could have further to go with more volatility likely expected this year as inflation risks shift to the upside and the Fed gets more aggressive.”

US ECONOMY: Manufacturing expanded again in January but at a slower pace than the previous month, according to a monthly index, while a Commerce Department report found construction spending rose at its weakest pace since the end of the global financial crisis. Monthly job data are due later Friday, providing another indicator for the U.S. economy, the world’s biggest.

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WALL STREET: Major U.S. benchmarks ended mostly lower. The Standard & Poor’s 500 index fell 0.1 percent to 2,821.98. The Dow Jones industrial average climbed 0.1 percent to 26,186.71. The Nasdaq composite lost 0.3 percent to 7,385.86.

ENERGY: Oil futures extended gains, with benchmark U.S. crude climbing 30 cents to $66.10 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.07, or 1.7 percent, to settle at $65.80 per barrel on Thursday. Brent crude, used to price international oils, added 20 cents to $69.85 per barrel in London.

CURRENCIES: The dollar rose to $109.66 yen from 109.41 yen in late trading Thursday. The euro weakened to $1.2496 from $1.2514.

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