TOKYO, Aug 28 2019 : Asian shares eked out meager gains today, as higher Wall Street futures provided some relief for investors after an overnight U.S. selloff, though deeper worries about the global economy are likely to keep a lid on sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.03%, Japan’s Nikkei .N225 rose 0.04% and Australia’s shares rose 0.07%.
The U.S. yield curve inversion deepened yesterday to levels not seen since 2007, which sent Wall Street stocks lower. The S&P 500 .SPX fell 0.33%.
Gold, which is bought as a safe haven during times of economic uncertainty, traded close to a six-year high.
“Bonds are rallying and there is limited upside for stocks right now,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.
“But I don’t want to give up on equities just yet. The U.S. Federal Reserve and officials in other countries simply have to do more to stimulate their economies, which will eventually prevent the bottom from falling out.”
U.S. stock futures ESc1 were 0.14% higher, which helped ease investors’ nerves in Asian trading, but there were still plenty of reasons to be concerned.
A trade dispute between the United States and China is now in its second year and is placing increasing strain on the global economy, forcing policy makers to respond with interest rate cuts and stimulus measures to bolster growth.
A bond yield curve inverts when long-term yields trade below short-term yields and is commonly considered a signal of an impending economic recession.
The yield on benchmark 10-year Treasuries stood at 1.4744%, compared with the two-year yield of 1.5159%. The yield curve inversion is the deepest since May 2007, when the U.S. subprime financial crisis started to unfold.
Yields on 30-year Treasuries stood at 1.9554%, below 3-month T-bill yields of 1.9951%, which some traders say is an even more bearish signal.
Spot gold was unchanged in Asia at $1,542.25 per ounce, but still close to a six-year high.
The dollar was little changed at 105.67 yen JPY=EBS after falling 0.3% yesterday.
U.S. crude ticked up 1.17% to $55.57 a barrel, supported by expectations of a drawdown in U.S. crude inventories. – Reuters