GLOBAL MARKETS – Mixed start to second half for Asian equities as US payrolls loom

* MSCI Asia ex-Japan index -0.2%; global markets lagging in the first half of the year

* Dollar and bonds in delicate balance ahead of US jobs report

By Tom Westbrook

SINGAPORE, July 1 (Reuters) – Asian stock markets began a mixed start to the second half of 2021 on Thursday, weighed down by concerns over new coronavirus infections and lockdowns, while bond and currency markets were ahead of the US Labor data.

Japan’s Nikkei was down 0.3% while the MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.2% in restricted trade as Hong Kong markets were closed for vacation.

The US dollar hit a 15-month high against the Japanese yen and Treasury yields were flat.

“The virus is still playing a role… although it’s hard to see a direction in anything right now,” ING economist Rob Carnell said on the phone from Singapore.

“There is a broad feeling the dollar is not such a bad unit to hold,” he said, as traders looked to US employment data on Friday for the next. index to the Federal Reserve’s rate outlook.

“Everyone is a little nervous… and there is so much money around that virtually every bet is covered,” he said.

“The market is completely divided – I think that’s why things are quite varied,” he added.

The U.S. private sector wage bill surpassed expectations overnight, although it is not a reliable guide to the broader labor market data expected on Friday, which economists predict will show 700,000 jobs. were created in June.

Data in Asia on Thursday painted a mixed picture, with Japanese manufacturers’ moods at their highest for two and a half years, but growth in factory activity there is slowing amid difficulty in sourcing. computer chips.

Slowing vaccination rates in Asia and extending restrictions to curb the spread of the virus as the delta variant spreads – as well as a regulatory crackdown on Chinese tech giants – have lagged behind. regional markets this year.

The MSCI Index closed the first half with a gain of 5.8% against the rise in global equities of 11.4% and a gain of 14.4% for the S&P 500, which set its fifth consecutive record closing to close last month.

EYES ON THE PAYROLL

For bond and currency markets, the focus this week is on data on non-farm wages in the United States and its implications for rates.

Since a hawkish change in tone from the Federal Reserve last month, the US dollar has been high and bond markets have been fooled by concerns about high inflation and whether this prompts an end earlier or faster than provided for an ultra-easy policy.

Signs of strength in the labor market could increase pressure on the Fed to act, and the prospect of higher rates could push the dollar higher, which is vulnerable if data falls outside expectations.

Economists polled by Reuters expect a gain of 700,000 jobs for June, against 559,000 in May. But the variation between the 63 estimates is significant, ranging from 376,000 to over a million.

“Unless the monthly jobs report is disappointing, the dollar index to beat is the highest of the year at 93.4,” analysts at Singapore’s DBS Bank said in a statement. note.

The US dollar index, which measures the greenback against a basket of six major currencies, hit its highest level since April overnight and held steady at 92.406 on Thursday.

The dollar also traded near its strongest against the euro since April at $ 1.1850 and hit its highest since March 2020 at 111.16 yen.

The yield on benchmark ten-year US Treasuries remained stable in Asia at 1.4663%.

In commodities markets, metal prices appear to be stabilizing below May’s peaks and oil rallied slightly to re-test multi-year highs reached earlier in the week.

Brent crude futures were last up 0.3% to $ 74.81 a barrel. Corn rebounded sharply overnight as weaker than expected US plantings supported prices.

(Reporting by Tom Westbrook; Editing by Himani Sarkar)


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