Asia share indexes were down Friday with one regional gauge set for its biggest monthly drop since the height of world pandemic lockdowns last March. The dollar was near one-month lows on expectations of continued U.S. Federal Reserve stimulus.
But stock market losses were moderate compared with falls earlier in the week created by market participant fears over the effect of regulatory action in China against education, property and technology companies.
Reassurances from China have helped soothe nerves, as have statements from the U.S. Federal Reserve that its bond-buying program will remain unchanged for now. The U.S. posted strong second quarter growth helped by rising vaccinations and government aid, but the expansion fell short of expectations.
On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.84%, taking its losses for the week to more than 6.5%. Japan's Nikkei dipped 1.71%, set for an 11th consecutive month of falls on the last trading day in the month.
In Asia economic data out early Friday Japan reported a recovery in retail sales and industrial production in June suggesting that activity was rebounding from coronavirus waves.
The 3.1% month-over-month rise in retail sales in June was stronger than a Bloomberg median of a 2.9% rise. The increase was driven by 15% month-over-month rises in both general merchandise and apparel sales. Fuel sales also rose.
Meanwhile, the 6.2% month-over-month rise in industrial production in June suggested semiconductor chip shortages are starting to ease in sectors such as motor-vehicle manufacturing. The rise was stronger than the Bloomberg median of 4.0%.
China blue chips fell 0.96%, and Hong Kong's Hang Seng fell 1.27%, with shares of technology companies down again. The Hang Seng Tech index deepened its losses for the week to more than 17%. Seoul's Kospi was last down 0.94% on the day.
"It's clear market participants are very rattled by the regulatory crackdown," said Michael Frazis, portfolio manager at Frazis Capital Partners in Sydney. He said the market continues to face other near-term pressures.
"You will have to talk about tapering, and you do have a lot of coronavirus beneficiaries which are largely in the tech sector. Growth will be slow, and they will be reporting numbers off of very high bases for this time last year...We expect tech indices to be challenged in the near term, but we're very optimistic over the medium and long term."
Lower-than-expected revenue reported by Amazon.com Inc. after hours Thursday U.S. time, and the company's forecast of slower sales growth in the coming quarters hurt U.S. stock futures early in the Asia trading day. Overnight in the U.S. Amazon shares fell more than 6% in after-hours trading after the company reported its first revenue miss in three years and gave weak third quarter guidance. For the three months ending Sept. 30, Amazon said it expects to book sales between $106 billion and $112 billion, well below consensus estimates of $119.2 billion.
Revenue was $113 billion for the second quarter, shy of analysts' average estimate of $115 billion, according to IBES data from Refinitiv. Profit rose 48% to $7.8 billion, the second-largest Amazon ever announced.
Amazon expects this lower growth to continue for the next few quarters. Brian Yarbrough, an analyst with Edward Jones, said it was "not feasible" for Amazon to maintain its breakneck pace. "It's still phenomenal growth when you think of the sheer size of the business," he said. "Obviously the pandemic helped them, but they're not going to be able to grow that rapidly on top of those numbers."
After rising Thursday on U.S. economic growth data, U.S. Treasury yields pulled back, particularly toward the long end of the yield curve.
Benchmark 10-year notes last yielded 1.2509%, down from 1.269% late Thursday, and the 30-year yield stood at 1.9001%, down from 1.916% Thursday.
The spread between the U.S. 10-year and two-year yield narrowed to 104.5 basis points.
"We think bond yields now discount an unduly pessimistic view of the medium- to long-term outlook...The prospects for a robust recovery - and higher bond yields - are arguably much better," analysts at Capital Economics said in a client note.
But following Fed chairperson Jerome Powell's statement earlier this week that rate increases are "a ways away" and the job market still had "some ground to cover," the dollar wallowed near one-month lows Friday and was set for its worst week since May.
The dollar index was last up 0.09% at 91.967, with the euro down slightly at $1.1879. The dollar was barely higher against the yen at 109.50.
In commodities markets, oil prices fell back after international benchmark Brent topped $76 a barrel on tight U.S. supplies.
Brent was down 0.53% at $75.65 per barrel and U.S. West Texas Intermediate crude traded down 0.52% at $73.24.
Spot gold was flat at $1,827.94 an ounce.
