PlusMarkets Analysis • July 20, 2021
Asian stocks widened their losses on Tuesday as investor sentiment dampened further amid growing fears the spreading Delta variant of the coronavirus would harm the global economic recovery, sending riskier assets skidding sharply.
Europe and U.S. markets look set to recover however with FTSE futures and E-mini futures for the S&P 500 index up 0.06% and 0.22% respectively.
MSCI’s gauge of Asia Pacific stocks outside Japan widened losses to nearly 1%, with Australia’s S&P/ASX 200 down 0.44%.
Japan’s Nikkei 225 hit a six-month low, down nearly 1%.
China deleveraging risks hurt property stocks and the broader market for a second day, causing a plunge in shares of heavily indebted developer China Evergrande Group. The Hang Seng Index plunged 1.16% while China’s benchmark CSI300 Index slid 0.53%.
Gold was up on Tuesday morning in Asia as concerns over the recent COVID-19 outbreaks involving the Delta variant in several countries also gave the safe-haven yellow metal a boost.
Gold futures were up 0.51% to $1,818.50 by 1:05 PM ET (5:05 AM GMT) after falling to a one-week low of $1,794.06 during the previous session.
The dollar, which normally moves inversely to gold, inched down on Tuesday but remained near a three-and-a-half-month peak. Benchmark 10-year U.S. Treasury yields fell to near five-month lows.
In Asia, the People’s Bank of China also kept its July loan prime rate (LPR) unchanged for the fifteenth straight month, with the one-year LPR at 3.85% and the five-year LPR at 4.65%. The European Central Bank and Bank Indonesia will also hand down their respective policy decision on Thursday.
Safe-harbour currencies like the yen and dollar traded near multi-month highs against the riskier Australian dollar and British pound on Tuesday, as fears grow that a rampant coronavirus variant could upend the global economic recovery.
Cryptocurrencies also sank, with bitcoin falling below $30,000 for the first time in about a month.
The yen traded at 80.09 per Aussie dollar, close to the more-than-five-month high of 80.05 touched on Monday. It stood at 149.48 to the pound, approaching the almost-three-month top of 149.35 reached overnight.
The dollar touched an almost-eight-month high of $0.7317 per Aussie on Tuesday before trading at $0.7319, and changed hands at $1.36625 to sterling after hitting the highest since early February at $1.3655 in the previous session.
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