Asian Shares Fall over Weak U.S. Data, Rising Bond Yields

Asian stocks fell from record-highs Friday with higher bond yields and disappointing U.S. data denting investor confidence. This is in a faster economic recovery from the coronavirus pandemic.

MSCI’s broadest index of Asia Pacific shares outside of Japan was previously down 0.1% at 733.9. This was from a record high of 745.89 touched on Thursday. After two consecutive weeks of gains, the index is on track for a small weekly loss.

It has surged nearly 10.5% since the start of the year. The index was largely led by easy monetary and fiscal policies globally. Moreover, initial rollouts of COVID-19 vaccines also led the index.

Australia’s benchmark S&P/ASX 200 index finished 1.3% down on Friday, while Japan’s Nikkei lost 0.7%.

Shares in China started the day in the red and recouped losses with the blue-chip CSI300 up 0.2%.

Led by the so-called “reflation trade”, core bond yields have pushed higher globally. It’s where investors wager on a pick-up in growth and inflation. 

Spurring reflation trades were the growing momentum for coronavirus vaccine programs and hopes of massive fiscal spending under President Joe Biden.

A surprise increase in the number of Americans seeking jobless benefits weighed heavily on the outlook. Initial unemployment claims rose by 13,000 to 861,000, the Labor Department reported. 

EU Stock Markets Opened Mixed with Focus on Earnings

European stock markets were mixed at Friday’s open, with careful investors focusing mainly on the insurance sector earnings. This was ahead of key PMI economic data.

In Germany, the DAX futures contract traded 0.1% lower at 2:05 AM ET (0705 GMT). France’s CAC 40 futures climbed 0.1%, while the UK’s FTSE 100 futures contract fell 0.1%.

This followed Thursday’s weak session in the United States. Valuation concerns reappeared against the backdrop of an unexpected rise in weekly jobless claims.

Swiss Re of the insurance sector will be in the spotlight after recording a net loss for 2020. Pandemic-related charges have weighed upon its earnings. 

From a year earlier, Allianz posted a better-than-expected 2.2% fall in net profit in Q4. This insurer in Germany noted pressure on business from the pandemic.

France’s Renault reported a record 8 billion euro ($9.68 billion) loss for 2020. The pandemic hit sales and production of both the carmaker and its Japanese partner Nissan. 

Furthermore, Volkswagen remains well supported. Reports said it has plans of spinning off Porsche, its most valuable brand, to unlock value.