HONG KONG- Asian shares traded sideways on fears about the spread of the coronavirus despite a record close on Wall Street as the dollar and US yields extended gains on Wednesday.
The dollar index rose to its highest since mid July, gaining against the yen, while the euro neared year-to date lows against the greenback.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.08 percent in Asian trading, with Chinese bluechips down 0.38 percent Korea’s KOSPI down 0.37 percent.
Improving US economic data and a more hawkish tone from Federal Reserve officials have led markets to expect the central bank to begin tapering its asset purchases later this year, pushing up yields and supporting the dollar.
But the move has been well flagged, meaning a repeat of the so-called “taper tantrum” of 2013 that shook markets when the Fed began putting the brakes on its quantitative easing program, is unlikely said Ray Farris, chief investment officer South Asia, Credit Suisse.
“In Asia there’s a little bit of concern about tapering but there is increasing understanding that we’re unlikely to get a tantrum,” said Farris.
“But there is a lot more concern about Delta because of its impact on a lot of Asian economies where vaccination rates are lower,” he said.
The Delta variant of the new coronavirus is spreading quickly in many Asian countries raising fears about local travel restrictions, hurting the economic recovery.
Australia was a rare bright spot, with the local index gaining 0.61 percent, helped by the announcement of a record share buyback by country’s largest bank, Commonwealth Bank of Australia, with its annual results. – Reuters
