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Asian shares held near year-to-date lows on Wednesday as overnight declines on Wall Street reinforced worries about the economic impact of the Delta coronavirus variant sweeping through the region.
The dollar stayed strong against most peers, while New Zealand’s central bank held off on a widely expected decision to raise interest rates after the discovery of a Delta variant case sent the country into lockdown.
The Reserve Bank of New Zealand would have been the first G10 central bank to begin hiking interest rates, but said the decision to hold was made in the context of the nationwide restrictions.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.19%, having fallen for the past five sessions, and traded just above year-to-date lows touched in July.
Chinese blue chips rose 0.21% and Japan’s Nikkei rose 0.35%. Taiwan stocks fell 1.09%.
”A narrative around the peaking of economic growth in the second or third quarter is really hitting home,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
”Investors are trying balance the reopening of economies as vaccination rates go up, but also seeing the effects of the spreading Delta variant and that’s being reflected in the slowing economic data most of which has been surprising on the downside in the last two weeks,” Craig said.
China on Monday reported year-on-year GDP growth of 7.9% in the second quarter, below the 8.1% forecast in a Reuters poll of economists.
Overnight, Wall Street fell after retail sales came in below expectations and valuations become increasingly stretched. The S&P 500 lost 0.71% after posting a new record high on Monday. [.N]
”In today’s market we find its very difficult to find undervalued stocks to recommend to investors,” said Dave Sekera, chief U.S. market strategist at Morningstar Research Services.
U.S. stock futures, the S&P 500 e-minis, were little changed in Asian hours, down 0.01%.
In currency markets the dollar hit a nine-month high against the euro and held near recent peaks against other major currencies as COVID-19 concerns meant investors cut exposure to riskier currencies.
Oil declined further in early Asian trading after falling for four sessions thanks to the stronger dollar and worries about the rise in coronavirus cases.
U.S. crude dipped 0.14% to $ 66.50 a barrel.
The yield on benchmark 10-year Treasury notes was 1.2617% compared to its U.S. close of 1.258% on Tuesday
(Reporting by Alun John; editing by Richard Pullin)