Asia stocks fall after stellar run, Korea tumbles

Asian stocks fell after surging to the highest level in almost 10 years, with investors assessing the strength of company earnings before American labour-market data provides the latest clues on the health of global growth.

South Korean shares dropped by the most since November, leading the declines, after President Moon Jae-in announced plans to raise taxes on big corporations. Stocks from Japan to Australia retreated, dragging down the MSCI Asia Pacific Index from its highest since December 2007.

The greenback held near a two-year low as Federal Reserve speakers expressed caution over further interest-rate increases. The euro, the best-performing Group-of-10 currency this year, maintained most of its surge against the dollar and the 10-year Treasury yield was at 2.26%.

Investors are also weighing a report that US President Donald Trump’s administration is preparing to investigate China over what the administration perceives to be violations of intellectual property, a move that would not only impact trade ties between the world’s two biggest economies, but could have negative ramifications for the global economy.

Corporate results are dominating sentiment this week, while Friday’s report on the US employment market may provide the next inflection point, as investors look for clues on the strength of the world’s largest economy and the Federal Reserve’s next policy move.

Here are some key upcoming events:

Bank of England Governor Mark Carney may signal a more hawkish tone at its quarterly Inflation Report on Thursday. The central bank will likely keep rates on hold. US jobs data on Friday will probably show employers added about 180 000 workers in July.

Here are the main moves in markets:

Stocks

The Kospi index fell as much as 2.2%, the most since November 9, the day after the US election, and was trading 1.5% lower in a test to a rally that propelled the benchmark to a record high last month. Samsung Electronics, which has the largest weighting on the index, dropped as much as 3.8%.

The government unveiled plans to raise taxes on big corporations and high-earning individuals Wednesday as Moon has vowed to tackle inequality.

Japan’s Topix index dropped 0.2% as of 1pm in Tokyo. Australia’s S&P/ASX 200 Index lost 0.4% as Rio Tinto shares tracked their London stock lower.  Hong Kong’s Hang Seng Index was down 0.2% and the Shanghai Composite Index also fell 0.2%.

Futures on the S&P 500 Index lost 0.1%. The underlying gauge added 0.1% and the Dow Jones Industrial Average rose 0.2% on Wednesday to break through 22 000. Tesla shares were up more than 7% in after-hours trading after the company burnt through less cash than expected in the second quarter.

Currencies

The yen was little changed against the dollar at 110.69. The Bloomberg Dollar Spot Index added 0.1% after slipping 0.1% on Wednesday. The euro fell 0.1% to $1.1845 after climbing 0.5% in the previous session.

Bonds

The yield on 10-year Treasuries slipped one basis point to 2.26%. 10-year yields in Australia fell to 2.68%.  

Commodities

West Texas Intermediate crude slipped 0.3% to $49.45 per barrel. It rose 0.9% on Wednesday. Record demand for gasoline helped ease concerns that increasing crude production from America’s shale fields will worsen a global glut.

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