SYDNEY (BLOOMBERG) - Asian equity markets slid on Friday (June 30), paring a quarterly gain, after a slump in US stocks triggered a surge in volatility. The US dollar held on to losses and bonds fell as central banks worldwide shift toward a more hawkish tone.
Stocks in Japan, Australia and South Korea declined after the S&P 500 Index lost the most in six weeks. The US technology sector's woes deepened as investors sold off the year's biggest winners and rotated into banks.
Volatility, absent for much of the year, is back as the the debate on normalizing central bank policy intensifies after nine years of unprecedented stimulus. That suggests some investors are growing concerned about the economy's ability to withstand a tightening cycle. Technology stocks remain under pressure, while banks have been supported on the prospect for higher rates.
Still, global equities are poised for an eighth month of gains that pushed stocks to a record high at the beginning of last week. US stock investors have been putting their faith in the robustness of earnings as the economy continues its recovery, shrugging off a host of worries from oil's slump into a bear market to political wrangling in Washington.
Bond fund managers, concerned about slowing inflation, will be watching key inflation data due out later in the day. A report early on Friday showed Japan's core consumer prices crept higher for a fifth straight month, but their slow rise means inflation remains far from the Bank of Japan's 2 percent target.
China's PMI may have declined in June after unexpectedly coming in unchanged in May. The official manufacturing measure is estimated to have dropped to 51 from 51.2, reflecting government efforts to cut overcapacity and leverage.
Japan's Topix dropped 0.8 per cent as of 9:10am in Tokyo, trimming the quarter's gain to 6.5 per cent. Australia's S&P/ASX 200 Index lost 1.4 per cent. South Korea's Kospi declined 0.6 per cent, paring its quarterly advance to 10 percent. Futures on Hong Kong's Hang Seng Index slid 0.5 per cent.
Futures on the S&P 500 Index were little changed. The underlying gauge fell 0.9 per cent on Thursday, the most since May 17. It's still up 2.4 per cent this quarter. The Nasdaq 100 Index lost 1.7 per cent, extending its slide this week to pushing its loss in June past 2 per cent.
The yen rose 0.1 per cent to 112.08 per dollar after gaining the previous two days.
The Bloomberg Dollar Spot Index was flat, heading for a monthly loss of 1.4 per cent, after dropping 0.2 per cent on Thursday. It's down the past four months. The euro was flat at US$1.1436, after increasing 0.6 percent on Thursday to the highest levels since last year's Brexit vote.
The pound was steady at US$1.3007 after a seven-day rally.
WTI crude futures rose 0.2 per cent to US$44.97 a barrel. Oil is up more than 4 per cent this week with prices climbing as government data showed a drop in US gasoline supplies that have remained stubbornly high at the start of the summer driving season.
Gold added was steady at US$1,245.74 an ounce, set for its first monthly decline this year.
The yield on 10-year Treasuries rose four basis points to 2.27 per cent on Thursday, after gaining two basis points on Wednesday and jumping seven basis points in the previous session.
Australian benchmark yields climbed seven basis points to 2.57 per cent.