* MSCI ex-Japan reverses early gains, falling off the 3-week top
* Chinese, HK shares lower, CSI300 index 1% off
* Dollar softens to two-week lows
* Crude oil prices are rising on the hope of an economic recovery
SYDNEY, April 7 (Reuters) – Asian stocks retreated from a three-week high on Wednesday, dragged lower by Chinese stocks, although investors were still focused on upcoming corporate earnings ahead of more signs of a global economic recovery.
Eurostoxx 50 futures were down 0.1%, German Dax’s had barely changed, while London’s FTSE futures were up 0.4%. E-Mini futures for the S&P 500 were mostly flat.
Previously, MSCI’s widest index of Asia-Pacific stocks outside Japan had started briskly, rising to 697.01 points, a level last seen on March 18.
However, it succumbed to selling pressure, falling 0.1% for the last time after Chinese and Hong Kong stocks opened in the red following a strong rally last week.
China’s bluechip CSI300 index fell about 1%, while Hong Kong’s Hang Seng index fell 0.8%.
The geopolitical tensions in the region added to the jitters.
Taiwan’s foreign minister said on Wednesday it will fight to the end if China attacks, adding that the United States saw a danger that this could happen under increasing Chinese military pressure, including aircraft carrier drills, near the island.
Other Asian markets were still positive.
Japan’s Nikkei was up a bit, while Australian stocks were up 0.6% and South Korea’s KOSPI was up 0.3%. New Zealand ended up 0.7% higher.
Overall, the successful roll-out of vaccines in the United States and the UK, along with solid macroeconomic data, has increased investor risk appetite and boosted emerging market equities and assets.
“The US economy is experiencing the first effects of a potent double-dose vaccine from broad-based vaccination and fiscal stimulus,” said David Kelly, chief global market strategist at JP Morgan Asset Management.
“The reality is that forecasts remain very uncertain … (but) early signs show that the recovery is accelerating, suggesting a faster return to ‘normal’ than many could have hoped for a few months ago,” Kelly added.
Overnight, the three major Wall Street indexes closed lower, a day after the S&P 500 and Dow rose to record levels, driven by a stronger-than-expected job report last Friday and data showing a dramatic recovery in the U.S. service sector showed.
Investors also weighed in on the latest US job posting report, which showed that the number of job openings rose to its highest point in two years in February, while the number of hires made its biggest gains in nine months amid increased COVID-19 vaccinations and additional government incentives.
In addition, the International Monetary Fund raised its global growth forecast from 5.5% from 5.5% to 6% this year, reflecting the rapidly improving outlook for the US economy.
According to data from Refinitiv, the upcoming earnings season is expected to show S&P earnings growth of 24.2% from a year earlier, and investors will see if corporate results further confirm recent positive economic data.
Elsewhere, all eyes will be on the minutes of the US Federal Reserve’s policy meeting, with a rally in US Treasuries until Wednesday. Ten-year interest rates fell 1.6555% from 1.776% on March 30.
Five-year US Treasury yields fell sharply to 0.874%, weighing heavily on the US dollar.
Five-year Treasury yields are seen as an important barometer of investor confidence in the Federal Reserve’s pledge that it does not expect to raise interest rates until 2024.
The dollar rebounded from a two-week low of 92,246 against a basket of world currencies.
The euro was stable at $ 1.1874, the pound sterling was slightly weaker at $ 1.3788, while the Japanese yen was slightly lower at 109.77.
In terms of commodities, Brent crude oil futures remained stable at $ 63.74 a barrel, while US crude oil rose 2 cents to $ 59.35.
Spot gold was at $ 1,741.4 an ounce.
Reporting by Chibuike Oguh in New York and Swati Pandey in Sydney; Edited by Christopher Cushing, Ana Nicolaci da Costa and Kim Coghill