Asian shares have wobbled in a choppy session as abysmal economic data from the US and rising global COVID-19 cases weighed on sentiment, despite strong US tech earnings and signs of manufacturing recovery in China and Japan.
The US dollar was also set for its worst month in a decade amid expectations the Fed will maintain its ultra-loose monetary policy for years.
US GDP collapsed at a 32.9 per cent annualised rate in the second quarter, the deepest decline on record, while jobless claims rose last week, adding to signs the momentum of economic recovery has slowed.
Those figures overshadowed positive manufacturing data from China and Japan. China’s official Purchasing Manager’s Index (PMI) data showed that factory activity grew in July for a fifth straight month and at a faster pace, defying expectations of a slowdown, while Japan’s industrial output snapped four months of declines in June.[
“We are seeing some tentative signs of an improvement in global trade flows as economies reopen, but the overhang from recessionary conditions in the developed world and rising infection rates are kind of a focus for investors at the moment,” said Ryan Felsman, senior economist at CommSec in Sydney.
After rising in early trade, MSCI’s broadest index of Asian shares outside Japan turned lower by late morning. It was last down 0.22 per cent.
Australian shares slid 1.85 per cent amid month-end profit taking and Seoul’s Kospi ticked down 0.2 per cent. Japan’s Nikkei dropped 1.87 per cent as a stronger yen weighed on exporters.
Chinese blue-chips were last down 0.29 per cent in a choppy session.
But futures resolutely pointed to a positive open on Wall Street on Friday after Apple, Amazon, Facebook and Alphabet reported quarterly earnings on the same day for the first time ever, all topping Wall Street estimates.
“All of them punched the lights out with respect to their earnings numbers,” said National Australia Bank strategist Ray Attrill. “It looks like it should be a pretty risk positive run into the weekend.”
E-mini futures for the S&P 500 rose 0.38 per cent.
Deemed “stay-at-home” winners as millions of Americans were ordered indoors to contain the COVID-19 pandemic, shares of the largest US technology companies have hit record highs in recent months as the coronavirus pandemic has thrown the economy into its steepest contraction since the Great Depression.
US stock markets, oil prices and the dollar slid on Thursday as the new data underscored the deep economic impact of the coronavirus and US President Donald Trump raised the possibility of delaying the November election.
On Wall Street, the Dow Jones Industrial Average fell 225.92 points, or 0.85 per cent, to 26,313.65, the S&P 500 lost 12.22 points, or 0.38 per cent, to 3,246.22 and the Nasdaq Composite added 44.87 points, or 0.43 per cent, to 10,587.81.
In the currency market, the dollar slumped 0.39 per cent against the yen to 104.31, while the euro jumped 0.4 per cent to buy $US1.1889.
The greenback remains on course for its worst month in a decade, with the dollar index dropping 0.12 per cent to 92.679.
Crude oil recovered from an overnight slump, with global benchmark Brent crude rising 0.54 per cent to $US43.17 a barrel. US crude added 0.3 per cent to $US40.04 per barrel.
Gold also turned higher, with spot gold trading 0.48 per cent higher at $US1,968.84 per ounce, just short of record highs.
US benchmark 10-year Treasury notes yielded 0.525 per cent, down from a US close of 0.541 per cent on Thursday. The two-year yield touched 0.1133 per cent compared with a US close of 0.121 per cent.