Hong Kong: Asian stocks eased on Friday before a slew of earnings from corporate heavyweights in the region, while Japanese government bond futures rose despite a ratings cut.
The MSCI index of Asian stocks outside Japan fell 0.3% in early deals despite an overnight rally on Wall Street. The Nikkei fell by more than 1%, weighed down by financial stocks.
Since the start of 2011, Asian stocks have underperformed the MSCI world index , which has risen by 2.5%, as investors have booked profits, particularly in markets, which are seen vulnerable to inflationary pressures.
On Thursday, Standard & Poor’s cut Japan’s credit rating by a notch for the first time since 2002 and Moody’s warned that it might turn negative on the US rating outlook if the deficit continued to swell. .
March 10-year futures opened lower, but quickly reversed losses to be up 0.17 points at 139.95 as the downgrade had largely been seen as a matter of time. On Thursday evening, it fell to as low as 139.48 immediately after the downgrade.
Ten-year yields edged lower to 1.215%, moving further away from this month’s peak of 1.260% hit last week.
Citigroup analysts said the downgrade might dissuade regional reserve managers from investing in Japanese assets on the margin but won’t trigger a large scale dumping of bonds.
The euro held most of its 1% gain at 113.71 after hitting a two-month peak around 114.00. In contrast, the dollar, after rallying by a big figure to as high as 83.22 yen , it lapsed to 82.87 in early Asian trade.
Gold held near four-month lows, after falling more than two% in the previous session, as safe-haven demand was depressed by a steady drip of positive data from Europe and the United States.