Read for 4 minutes (Reuters) – SINGAPORE (Reuters) – On Thursday, Asian stock markets remained quiet to begin the second half of 2021, dragged down by fears of more coronavirus outbreaks and new lockdowns, while bond and currency markets were jittery ahead of US labor data. FILE PHOTO: A man wearing a mask walks through the Pudong business area in Shanghai, China, on February 3, 2020, as the country is plagued by an outbreak of a new coronavirus. Aly Song/File Photo/REUTERS As Hong Kong markets were closed for the holiday, Japan’s Nikkei sank 0.3 percent, while MSCI’s broadest index of Asia-Pacific equities outside Japan fell 0.2 percent. The dollar rose to a 15-month high against the yen, while Treasury yields remained unchanged. [FRX/] [US/] On the phone from Singapore, ING economist Rob Carnell said, “The virus is still playing a role… although it’s tough to discern any direction in anything at the moment.” “There’s a widespread sense that the dollar isn’t such an awful unit to be holding,” he said, as traders awaited Friday’s jobs report from the United States, which will provide the next clue on the Federal Reserve’s rate stance. “Everyone gets a little anxious,” he observed, “and there’s so much money floating around that nearly every wager is covered.” “The market is utterly divided,” he added, “and I believe that’s why things are so erratic.” Private payrolls in the United States exceeded forecasts overnight, albeit they are a poor predictor of larger labor-market data due out on Friday, which economists believe to show 700,000 new jobs gained in June. On Thursday, data from Asia showed a mixed picture, with Japanese manufacturers’ optimism at a two-and-a-half-year high, but industrial activity growth slowing due to difficulties acquiring computer chips. Slower immunization rates in Asia, as well as a regulatory crackdown on Chinese internet firms, have caused regional markets to lag this year. The MSCI index finished the first half with a 5.8% gain, compared to a 11.4 percent increase for world stocks and a 14.4% gain for the S&P 500, which ended last month with its fifth consecutive record closing high. [.N] This week’s focus for bond and currency markets is on the non-farm payrolls data from the United States and its implications for interest rates. Concerns over high inflation and whether it spurs a sooner or faster than expected conclusion to ultra-easy policy have pushed up the dollar and thrown bond markets into a tailspin since the Federal Reserve’s hawkish shift in tone last month. Signs of labor market strength might put pressure on the Fed to act, and the threat of higher rates could boost the dollar, but it could also be sensitive if the data falls short of expectations. Reuters polled economists, who predicted a 700,000 job growth in June, up from 559,000 in May. However, there is a lot of diversity among the 63 estimates, which range from 376,000 to more than a million people. “Unless the monthly jobs report disappoints, the year’s high at 93.4 is the target to beat for the dollar index,” analysts at DBS Bank in Singapore wrote in a note. The US dollar index, which compares the greenback to a basket of six major currencies, climbed to 92.406 overnight, its highest level since April. The dollar also hit its highest level against the euro since April, at $1.1850, and its highest level versus the yen since March 2020, at 111.16 yen. In Asia, the yield on ten-year US Treasury bonds remained unchanged at 1.4663 percent. Metals prices appear to be stabilizing below May peaks, but oil prices are moving higher to re-test multi-year highs hit earlier this week. [O/R] Brent oil futures were last trading at $74.81 a barrel, up 0.3 percent. Corn prices rose sharply overnight, helped by lower-than-expected planting in the United States. [GRA/] Tom Westbrook contributed reporting, and Himani Sarkar edited the piece./n
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