Asia stocks struggle as US yields near 3 pct, oil stays high

SYDNEY: Asian stocks dipped yesterday as investors braced for a bevy of earnings from the world’s largest corporations, while keeping a wary eye on US bond yields as they approach peaks that have triggered market spasms in the past.

Traders were also anxiously awaiting surveys on global manufacturing for April to see if economic softness in the first quarter was just a passing phase linked to poor weather and the Lunar New Year holidays.

The first reading from Japan was tentatively upbeat with its PMI firming to 53.3 in April as output and domestic demand picked up.

On the geopolitical front, US President Donald Trump said on Sunday the North Korean nuclear crisis was a long way from being resolved, striking a cautious note a day after the North pledged to end its nuclear tests.

Oil prices edged down in early trade but were not far from their highest since late 2014.

The market had wobbled on Friday when Trump tweeted criticism of OPEC’s role in pushing up global prices, but quickly steadied.

Brent crude oil futures were off 3 cents at US$ 74.03 per barrel, while US crude eased 10 cents to US$ 68.30.

In stock markets, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent, with South Korea off 0.2 per cent.

Japan’s Nikkei eased 0.3 per cent and China blue chips 0.6 per cent as tech stocks continued to struggle with a warning on waning demand for mobile phones.

E-Mini futures for the S& P 500 went the other way to edge up 0.24 per cent. FTSE futures added 0.2 per cent.

Rising bond yields had pressured Wall Street on Friday, though the S& P 500 still managed to end the week with a slight gain.

More than 180 companies in the S& P 500 are due to report results this week including Amazon, Alphabet, Facebook, Microsoft, Boeing and Chevron.

The spike in oil has driven up both market expectations of future inflation and long-term bond yields.

Yields on 10-year Treasuries are at the highest since early 2014 at 2.977 per cent and again threatening the hugely important 3 per cent bulwark. — Reuters