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Asian share markets drop, Wall Street rises

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MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.4%, while Chinese blue chips declined 1%

Share markets in Asia were mixed on Friday after a volatile week in which global sentiment waned amid the rapid spread of the Delta variant of coronavirus across the world.

A slew of surveys on July manufacturing are expected to show a slight softening of activity in Europe and the United States, though from very high levels, while Asia looks more vulnerable.

In the face of headwinds from the Delta variant of the COVID-19 virus, the global economic expansion is moving forward—albeit more tentatively than a month ago, said Sara Johnson, executive director of global economics at IHS Markit.

Outlooks in advanced countries with high vaccination rates remain bright, but near-term prospects in emerging and developing countries with low vaccination rates are murkier, she said.

That diverging outlook was reflected in MSCI’s broadest index of Asia-Pacific shares outside Japan which slid 0.4%, dropping 1.1% on the week so far.

Japan’s Nikkei was closed for a holiday, but off 1.7% for the week and a whisker away from a seven-month trough.

Chinese blue chips declined 1%, though well within the tight trading range of the past three weeks.

Wall Street was in a better position on a series of strong earnings as Nasdaq futures were 0.3% higher and S&P 500 futures up 0.2%. EUROSTOXX 50 futures also rose 0.3%, while FTSE futures advanced 0.4%.

Investors are now looking ahead to the Federal Reserve’s policy meeting next week which is expected to discuss tapering, though Chair Jerome Powell has repeatedly said the labour market remains well short of target.

He also still argues that the recent spike in inflation will prove fleeting, which may be one reason bond markets have been rallying so hard. Yields on U.S. 10-year notes were last at 1.28%, having hit a five-month low of 1.128% early in the week.

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