Asian stock markets retreated on Thursday and the yen climbed amid concern a trade spat between South Korea and Japan may be protracted and investors weighed a flurry of corporate earnings. Treasuries extended gains and US futures dipped.
Japan’s Topix index fell more than 1%, on course for a fourth day of losses. A drop in Hong Kong, South Korean and Australian equities was more modest. Futures on the S&P 500 Index and Nasdaq dipped as Netflix Inc.’s surprise loss of US customers in the second quarter sent its shares tumbling. The Korean won fell after the nation’s central bank cut its key interest rate. Benchmark Treasury yields dipped to 2.04% with Australian bonds tracking the overnight gain in US debt.
With just two weeks until the Federal Reserve’s policy meeting when investors expect an interest-rate cut, the central bank’s anecdotal Beige Book report suggested the outlook was generally positive and the labor market remains tight -- but companies are still struggling to pass on higher wages and tariff-related costs to customers. After South Korea joined recent moves in Malaysia, India and the Philippines in cutting rates, a monetary policy decision in Indonesia later Thursday will be closely watched as well as earnings due from Taiwan Semiconductor and China Evergrande.
While early indications are usually unreliable when it comes to corporate profits, investors have closely watched those reports for clues on the state of the world’s largest economy amid the threat of a trade war. Investors in Asia largely took comments from President Donald Trump in their stride after he said more tariffs on China are possible.
Elsewhere, oil sank after a mixed US government report showed a surprising drop in fuel demand last week.