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Published: 13:05, July 27, 2021 | Updated: 20:35, July 27, 2021
Asian stocks hit 2021 lows, real yields drop before Fed
By Reuters
Published:13:05, July 27, 2021 Updated:20:35, July 27, 2021 By Reuters

LONDON - World stocks fell on Tuesday after investors sold Chinese internet giants for a third straight day, while real US bond yields hit record lows on worries about the economic outlook ahead of a Federal Reserve meeting.

The Hang Seng Tech index slid almost 8 percent, plumbing its lowest since its inception in July 2020 and losing 17 percent in three days.

Chinese bluechips dropped 3.53 percent, hitting 2021 lows.

European stocks fell 0.37 percent, moving further away from recent record highs. Britain’s FTSE 100 was down 0.43 percent. Global stocks fell 0.3 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.94 percent, hitting its lowest since December.

“Valuations are tight but I don’t think the China tech crackdown will lead to a major equities sell-off,” said Christian Lenk, a rates strategist at DZ Bank in Frankfurt.

S&P 500 futures dipped 0.22 percent after all three major US stock indexes closed at record highs for a second straight session on Monday, on optimism ahead of a slew of tech earnings this week. [.N]

Alphabet Inc, Apple Inc and Microsoft Corp are set to publish quarterly results late on Tuesday, with Amazon.com Inc’s due later in the week.

Powell alert

The Fed begins its two-day meeting on Tuesday, with investors set to scrutinise a statement and press conference from Chair Jerome Powell due late Wednesday.

They will be looking to see how the central bank will balance fast-rising prices with the complication of increased coronavirus infections.

“There’s a realisation that we have passed the peak of growth,” said Derek Halpenny, head of research at MUFG.

“Some of the supply constraints are beginning to ease.”

Real, or inflation-adjusted, bond yields across major economies have fallen in recent sessions, a move analysts attribute to growing concern about the economic outlook following an upsurge in COVID-19 variants, as well as technical factors such as hefty bond-buying by central banks.

The yield on 10-year Treasury inflation-protected securities (TIPS) hit -1.147 percent on Tuesday, down about 4 basis points on the day.

German inflation-linked bond yields also extended recent falls, hitting a new low at around -1.747 percent.

The yield on benchmark 10-year US Treasury notes slipped 1.8 basis points and 10-year German Bund yields dropped 1.9 basis points, close to a 5-1/2 month low set on Monday.

The dollar gained 0.11 percent against a basket of currencies and the euro dipped 0.1 percent to US$1.1787. The dollar fell 0.23 percent against the yen.

Oil prices inched up as investors bet tight supply and rising vaccination rates will help offset any impact on demand from surging COVID-19 cases worldwide.

Brent crude futures rose 18 cents to US$74.68 a barrel. US West Texas Intermediate (WTI) crude futures rose 3 cents to US$71.94 a barrel.

Gold was steady at US$1,796.40 per ounce.

Bitcoin was trading around US$37,600, 0.8 percent higher on the day. It has recouped some losses after it fell from a Monday peak of US$40,581 after Amazon.com offered a qualified denial of a weekend news report that said it was preparing to accept cryptocurrencies.


 


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