- Asian equities trim latest gains as geopolitics join reflation fears.
- Alska talks recall Sino-American tussle, BOJ alters ETF range, allows long-term rates to move 0.25%.
- US Treasury yields step back from multi-month top, US stock future print mild gains.
Asian shares print losses on Friday as traders remain concerned over reflation while the US-China tension adds to the risk-off mood. Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan drops 1.30% while Japan’s Nikkei 225 bears the burden of BOJ’s decision to buy only TOPIX-linked ETFs while dropping over 1.5% ahead of Friday’s European session.
The Bank of Japan (BOJ) marked a widely anticipated move of no change in the benchmark rate of -0.10% while altering the ETF and yield control curve (YCC) targets. Even so, the Japanese central bank also said, “excess lowering of long-term interest rates could negatively affect economic activity in long run.”
On the other hand, policymakers from the Washington and Beijing squabbled in Alaska as none of them wanted to compromise, but showed them otherwise. Though, a senior diplomat from US President Joe Biden’s team said, “Discussions with China officials were substantive, serious and direct.” This gave a negative impression to Chinese investors who were trying to forget the recent equity slump.
Elsewhere, a preliminary reading of Australia’s February Retail Sales dropped below forecast and prior and joins the Sino-American tussles to weigh on the ASX 200, currently down 0.40%. On the contrary, New Zealand’s NZX 50 bucks the trend with 0.32% gains amid talks over border relaxation and the need for further easy money policies after the previous day’s disappointing GDP figures.
It’s worth mentioning that Indonesia’s IDX Composite, South Korea’s KOSPI and India’s BSE Sensex move in tandem with the market’s downbeat mood. However, the S&P 500 Futures print mild gains as the US 10-year Treasury yields step back from the 14-month top, marked the previous day.
Moving on, a lack of major data/events on the calendar, except for BOJ Governor Haruhiko Kuroda’s speech and Canadian Retail Sales for January, keeps traders directed to the risk catalyst for fresh moves. In doing so, headlines from Alaska and concerning the covid vaccines should be the key.
