Asian shares drop after this week’s rallywritten by Bella Palmer
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.22 per cent, Hong Kong dropped 0.31 per cent, Australia shed 0.49 per cent, and Kospi dropped 0.31 per cent
Shares in Asia stepped back on Thursday after a sharp bounce back this week, though a strong Wall Street performance overnight contained losses in the region as rising vaccinations offset some of the worries over persistently high Covid-19 cases worldwide.
Global inflation was also in focus as the South Korean central bank raised its base rate by 25 basis points to 0.75 per cent, the first major economy in Asia to do so.
In early trading MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.22 per cent, with declines in Chinese blue chips off 0.81 per cent, Hong Kong down 0.31 per cent and Australia shedding 0.49 per cent.
Japan's Nikkei added 0.04 per cent. Korea's Kospi was little affected by the central bank hike, dropping 0.31 per cent in line with regional moves.
The Asian stock benchmark is still up nearly 4 per cent on the week, having largely joined a rally in global markets as investors look to the upcoming Jackson Hole Symposium for assurances that the Federal Reserve won't be rushing in to tighten policy.
However any further gains in equity markets will be limited and a correction is likely by the end of the year, a Reuters poll of analysts found.
Asia is also lagging the rest of the world this year. The MSCI world equity index is very close to record highs, while the MSCI Asia ex Japan benchmark is off over 12 per cent from record highs hit in February.
Asia would be doing a lot better if it were not for the Delta outbreak. However, we've seen at various times over the last 18 months where different regions have led and lagged depending on where they are in relation to Covid-19, said Shane Oliver, Chief Economist at AMP.
Vaccinations have started to pick up in a number of the countries, raising hopes for the outlook although the rates are still relatively low.
Many countries in the region are grappling with a surge in cases of the Delta variant of coronavirus.
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