Stocks in Asia were mixed on Wednesday, in a largely muted reaction to a record high in US stocks, while a stronger yen capped gains in Japan’s Nikkei Stock Average. U.S. crude also slipped 0.4 percent to $42.62, extending Tuesday’s 0.6 percent decline.
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Most Asian stocks fell as Japanese shares retreated amid a stronger yen, while concerns about elevated valuations dragged equities in India and Indonesia lower.
European equity markets sank “as investors bank some profits after markets hit recent highs and the German index entered a bull market yesterday, rising 22 percent since February”, said Rebecca O’Keeffe, head of investment at broker Interactive Investor. The U.S. Labor Department said on Tuesday that productivity, which measures hourly output per worker, dropped at a 0.5 percent annual rate in the April-June period, extending the longest decline since 1979.
The dollar moved around ¥101.80 in early trading, carrying over its weak tone from overnight trading overseas, where the greenback was hit by selling due to sluggish USA economic data released Tuesday and a drop in US interest rates. “So we may be seeing something of a “Goldilocks” market globally”, he added.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, shed 2.66 points, or 0.20 percent, to finish at 1,314.83.
US bond yields fell after a weak report on USA productivity, with the 10-year notes yield dipping to 1.538 percent from Monday’s two-week high of 1.616 percent.
“Low U.S. productivity growth could suggest the third- quarter growth can’t be fantastic”.
“The market is buying into the underlying premise that the USA economy is robust, but not churning at sufficient levels to warrant any immediate policy response”, Innes said.
Additionally, the Bank of England’s reverse bond auction failed to meet its target on Tuesday, highlighting the scarcity of investors willing to sell from a dwindling pool of long-term bonds with positive yields. Toyota Motor Corp. fell 1.1 per cent, pacing losses among Japanese exporters as the yen strengthened.
That in turn sent the euro up 0.6 percent to $1.1186, extending its recovery from Friday’s one-week low of $1.1046.
The British pound remained under pressure, having hit one-month low of $1.2956 on Tuesday as a Bank of England policymaker said the central bank will probably have to loosen monetary policy further if the UK’s economy worsens.
The US dollar’s weakness gave gold a lift, with the precious metal gaining 0.9 percent to $1,352.26 an ounce.
Oil prices slipped after a surprise US crude stockpile build rekindled worries about a persistent global glut.
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Brent futures LCOc1 fell 1.5 percent to $44.30 per barrel, after losing 0.9 percent on Tuesday. USA crude also slipped 0.1 percent to $42.70, extending Tuesday’s 0.6 percent decline.
