SYDNEY- Asian shares were subdued on Thursday after Fitch downgraded US sovereign debt sparking profit-taking, with investors now shifting focus to Bank of England’s rate decision and earnings from Apple and Amazon.
Both S&P 500 futures and Nasdaq futures added 0.2 percent , following a heavy wave of selling on Wall Street overnight.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent , having also suffered a colossal drop of 2.3 percent just a day earlier. That compared with a 5.4 percent monthly gain in July.
Japan’s Nikkei fell 1.1 percent , bringing the losses so far in August to 2.5 percent , giving back some of the 7.5 percent surge seen a month earlier.
The yield on 10-year Japanese government bonds (JGB) rose to 0.65 percent on Thursday, the highest since April 2014, after the Bank of Japan loosened its grip on yield curve control last week.
Chinese blue chips were 0.2 percent higher while Hong Kong’s Hang Seng index was mostly flat. A private survey showed China’s services activity expanded at a faster place in July.
“I reckon that even though you could argue that the Fitch downgrade is outdated … I think you’ve seen enough movements for some things to be burned and some questions to be asked at these highs,” said Matt Simpson, a market analyst at City Index in Brisbane.
“I reckon at best you probably could look at some choppy trade around these highs or at worst we can have a bit of a deeper pullback.”
Overnight, Nasdaq and S&P 500 posted their biggest declines since February and April, respectively, after a blistering July driven by better-than-expected earnings and hopes of a soft landing for the US economy.
Later in the day, Apple is expected to report the largest third-quarter drop in revenues since 2016 as sales of iPhones slow.
Amazon.com Inc a bellwether for consumer spending, is expected to report a more than 8 percent rise in second-quarter revenue, aided by a recovery in the advertising and e-commerce businesses.
Risk sentiment has been tempered by higher long-term US yields after stronger-than-expected private employment data and the announced refunding of the US government’s maturing debt.
