SYDNEY – Asian shares edged lower on Tuesday on concerns new coronavirus outbreaks in the region could undercut an economic recovery even as robust momentum in the United States prompts the Federal Reserve to contemplate a quicker exit from accommodative policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.11 percent lower, hovering near recent highs, though momentum has stalled as some countries re-impose lockdowns to contain the spread of the Delta virus variant.
Australian and Japanese shares took the brunt of early losses, with the ASX/200 index down 0.76 percent and the Nikkei falling 0.91 percent. The South Korean market was 0.39 percent lower, and Chinese stocks were also down 1.06 percent.
Fears over the spread of the highly infections Delta virus variant have dented sentiment at a time markets remain on edge after the Fed shocked traders with a hawkish tilt earlier this month.
Australia is battling small but fast growing outbreaks with snap lockdowns in several cities, while Indonesia is also grappling with record-high cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.
“Markets are really treading water ahead of the very significant US labor data later in the week,” said Ray Attrill, Head of FX Strategy at National Australia Bank in Sydney.
“We have a month and quarter end and here (Australia) a financial year end tomorrow, so that’s probably another reason for markets not to want to be taking a particularly strong view of things.”
On Friday, a closely-watched US jobs report for June will be released, which could sway the Fed’s policy outlook and bring forward expectations for interest rate increases.
