Asian stocks fell on Thursday, taking the lead from losses on Wall Street, while a rise in euro zone debt yields amid a global bond rout kept the euro hovering at a two-month peak versus the dollar. As European deflation fears have ebbed, a seeming reversal of trades linked to the European Central Bank’s big quantitative easing has resulted in a sell-off in core European bonds and equities this week, rattling investors across asset classes.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.1 percent as China, Hong Kong, Australian, South Korean and Malaysian shares retreated. The Shanghai Composite Index .SSEC was down 1.8 percent, extending its losses so far this week to 6.4 percent. The index is up an impressive 28 percent so far this year on views that Chinese policy easing would shore up equities. The steep gains, however, have triggered expectations of a sharp correction.
“Another few such declines and some of the millions of retail investors who have recently piled into the market might start to wonder if it really is a guaranteed way to make 30-40 percent returns every year or not,” analysts at Rabobank wrote in a note. Tokyo’s Nikkei .N225 lost 1.1 percent in its first trading day of the week. Japanese financial markets were closed from Monday to Wednesday for public holidays.