Reuters - Asia share indexes were down in the early going Tuesday on concerns new coronavirus outbreaks in the region could undercut an economic recovery even as robust momentum in the United States prompts the Federal Reserve to contemplate a quicker exit from accommodative policy.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.11% lower, hovering near recent highs, though momentum has stalled as some countries reimposed lockdowns to contain the spread of the Delta virus variant.
Australia and Japan indexes saw early losses, with the ASX/200 index down 0.76% and the Nikkei falling 0.91%. South Korea's market was 0.39% lower and China stocks were also down 1.06%.
Fears over the spread of the infectious Delta virus variant have dented sentiment at a time markets remain on edge after the Federal Reserve shocked traders with rate-rise comments earlier this month.
Australia is battling small but fast growing outbreaks with snap lockdowns in several cities, while Indonesia is also grappling with record-high cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.
"Markets are really treading water ahead of the very significant U.S. labor data later in the week," said Ray Attrill, Head of FX Strategy at National Australia Bank in Sydney.
"We have a month and quarter end and here (Australia) a financial year-end tomorrow, so that's probably another reason for markets not to want to be taking a particularly strong view of things."
On Friday U.S. jobs data for June will be released - which could sway Federal Reserve's policy outlook and bring forward expectations for interest rate increases.
"Inflation is already much higher than the Federal Reserve was anticipating, so it is really the pace of improvement in the labor market that stands head and shoulders above every other indicator in terms of when the Federal Reserve will feel comfortable signaling the start of tapering," Attrill said.
News of a possible bipartisan U.S. infrastructure spending agreement over the weekend helped boost risk appetite overnight.
On Wall Street, the Nasdaq and S&P 500 gained 0.98% and 0.23% respectively to hit all-time highs Monday, fueled by tech stocks as investors bet on a robust earnings season.
Big tech companies including Facebook Inc., Netflix Inc., Twitter Inc. and Nvidia Corp. were among the leaders, helping the S&P 500 sustain momentum after it registered its best weekly performance in 20 weeks Friday. In contrast, the Dow Jones Industrial Average fell 0.44, and cyclical sectors dropped sharply on fears over the spike in COVID-19 cases across Asia.
In currency markets, the U.S. dollar held largely steady as investors stayed on the sidelines ahead of Friday's jobs report.
Investors are also looking at U.S. consumer confidence data Tuesday as well as the Institute for Supply Management's manufacturing index Thursday for clues as to where interest rates are headed.
Both the dollar and yen have benefited from some safe-haven demand driven by concerns over the spread of the Delta virus strain.
The dollar was little changed against the euro at $1.192 and against the yen it held at 110.46.
Yields for benchmark 10-year U.S. Treasurys also were steady at 1.483.
Brent crude was 0.28% down at $74.43 a barrel. U.S. crude was last down $0.18, or 0.25%, at $72.73 per barrel. Spot gold was little changed at $1,777.12 per ounce by 01:33 GMT.
