Asian shares spooked by Delta spread

HONG KONG (Reuters): Asian shares retreated on Thursday, brushing off an upbeat Wall Street lead as the Delta coronavirus variant’s spread darkened the regional mood while a South Korean interest rate hike put the focus on the global central bank outlook.

Investors are mostly waiting for the Federal Reserve’s Jackson Hole symposium on Friday and what central bank chair Jerome Powell might say about US tapering monetary stimulus.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.60%, and US stock futures the S&P 500 e-minis, shed 0.14%.

Chinese bluechips fell 1.47% and Hong Kong was down 1.32%, as a rally in tech names ran out of steam. The embattled Hang Seng Tech Index fell 2.41%.

A profit warning from Evergrande, China’s most indebted property developer sent its shares down 7.24%.

Elsewhere, the Australian benchmark lost 0.7% as the country’s new daily cases of COVID-19 topped 1,000 for the first time. Japan’s Nikkei was little changed having spent the day flickering either side of flat.

The Asian stock benchmark is still up around 3.5% on the week, having largely joined a global rally as investors look to the Fed’s upcoming Jackson Hole symposium for assurances the central bank won’t be rushing to tighten policy.

However, Asia is lagging the rest of the world this year. The MSCI world equity index, which tracks shares in 50 countries, is sitting very close to record highs, while the MSCI Asia ex-Japan benchmark is off over 12% from its record highs hit in February.

Overnight, US shares inched higher with the S&P 500 closing at its 51st record high of the year, gaining 0.22%.

“Asia would be doing a lot better if it were not for the Delta outbreak. However, we’ve seen at various times over the last 18 months where different regions have led and lagged depending on where they are in relation to COVID-19,” said Shane Oliver, Chief Economist at AMP. South Korea on Thursday reported a jump in the number of critical or severe cases while infections hit records in Vietnam and the Philippines this week.