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Hong Kong - European and Asian equities fell with US stock index futures, weighed down by weakening corporate earnings and subdued economic data. Crude oil retreated from a six-month high, while haven assets including the Japanese yen and gold advanced.
The MSCI All Country World Index was set for a third weekly decline, its longest losing streak since January. South Africa’s rand and South Korea’s won led declines among emerging-market currencies as the yen strengthened against all of its major counterparts.
Australia’s dollar slid to a two-month low amid speculation the central bank will cut interest rates further this year. Crude fell toward $46 a barrel as copper slumped in Shanghai. The 10-year US Treasury yield slipped to a one-month low.
Bullish momentum in equities from a February low faltered this month as signs of weakness in the global economy heightened concern about whether central banks’ have the ability to revive growth. Bank of Japan Governor Haruhiko Kuroda said on Friday that risks to Japan are tilted to the downside and reiterated that monetary policy will be loosened further if needed.
Hong Kong Financial Secretary John Tsang said the city’s economy is facing downward pressure and gross domestic product data due on Friday will reflect challenges.
'After the rally in March and April, things are still looking a little bit uncertain," said Oliver Lee, investment director at Old Mutual Global Investors (Asia Pacific). "There’s not much conviction in the market. The market is still being driven by central bank sentiment and currency movements. The earnings season in Japan hasn’t been great."
Germany announced its fastest GDP growth in two years for the first quarter, before updated figures are released for the euro area. Malaysia unveiled its slowest expansion in six years.
US reports are projected to show retail sales increased in April for the first time this year and consumer sentiment climbed in May from a seven-month low. South Korea’s central bank left its key interest rate at a record low, as predicted by 15 of 18 economists in a Bloomberg survey.
Chinese figures for new loans and money supply are scheduled to come out as early as Friday, while reports on industrial production and retail sales are lined up for Saturday. Industrial output growth is expected to have cooled in April and new loans are estimated to be down more than 40% from March, Bloomberg surveys show.
Stocks
The Stoxx Europe 600 Index fell 0.6% headed for its lowest close in more than a month. Volkswagen declined for a second day as a report showed its European market share narrowed for an eighth consecutive month in April.
Bouygues SA and Hapag-Lloyd advanced after reporting losses for the first quarter.
The MSCI Asia Pacific Index fell 1.3% to a one-month low. Quarterly earnings dropped 19% in aggregate for companies included in the benchmark that have reported so far in the current season, compared with declines of 8.8% for S&P 500 members and 27% on the Stoxx Europe 600 Index.
Japan’s Topix index fell 1.3% as the nation’s earnings season peaks on Friday, with more than 400 of the benchmark’s members reporting. Mizuho Financial Group, the nation’s second-biggest lender by assets, forecast net income will decline 11% this fiscal year.
The Shanghai Composite Index dropped for a fourth week, the longest string of losses in two years, and the Hang Seng China Enterprises Index was poised to enter a correction. Hong Kong’s Hang Seng Index slid to a two-month low.
Taiwan Semiconductor Manufacturing dropped to a three-month low after Nikkei reported that the company’s shipments of chips for Apple's iPhone 6s and iPhone 7 will likely slide by at least 20% in the second half of this year from the same period of 2015. Samsung Electronics, the world’s largest maker of phones and memory chips, slipped more than 2%.
Futures on the S&P 500 lost 0.5%, after Apple - the world’s most valuable company - sank to the lowest since June 2014 in the last session.
Currencies
The yen strengthened 0.3% to 108.68 per dollar, paring its weekly decline to 1.5%.
"We’re looking for further BOJ easing in July, but there’s always the risk that they might move in June," said Shinichiro Kadota, a Tokyo-based foreign-exchange strategist at Barclays. "Those kind of policy expectations would support dollar-yen around the current levels of between 105 and 110."
The Bloomberg Dollar Spot Index added 0.2%, poised for a second weekly gain. Regional Federal Reserve chiefs for Boston and Kansas City argued at separate events on Thursday that the US central bank risks stoking an asset bubble by delaying raising interest rates for too long. The odds of a hike by year-end climbed to 53% from 48% on Wednesday, Fed Funds futures show.
The Aussie was down 0.6%, headed for a fourth weekly drop. Commonwealth Bank of Australia said policy makers will trim Australia’s key interest rate to 1.25% by year-end, from an all-time low of 1.75% now.
The rand and the won declined by 0.8%, helping push a Bloomberg gauge of emerging-market currencies lower for a second week.
Commodities
West Texas intermediate crude was down 1.1% at $46.20 a barrel, after ending on Thursday at a six-month high.
Producers in Canada plan to resume operations at some oil-sands sites after wildfires took production offline, while Nigeria said militant attacks have cut output by as much as 600 000 barrels a day. US inventories dropped by 3.4 million barrels last week, government data showed on Wednesday.
Copper slumped to the lowest level in more than three months in Shanghai amid concern demand will cool in China, the top consumer. The nation’s steel reinforcement-bar futures plunged by a record 13% this week, after price surges over the last two months prompted authorities to clamp down on speculation in the commodities market.
"The steel market took a hit as blast furnace operation rates, inventories, have all been climbing so the previous concerns over a shortage have abated," Xu Tao, Wang Nan and Li Xiaodong, analysts at Zheshang Futures, said in a report on Friday.
Gold gained 0.8%, trimming this week’s loss to 1.2%.
Bonds
Demand for haven assets helped boost US Treasuries. The 10-year yield fell two basis points to 1.73%. Similar-maturity sovereign debt also advanced in France, Germany and the UK.
