SYDNEY- Asian shares skidded to seven-month lows on Monday as regulation concerns upended Chinese equities and strong US corporate earnings sucked funds out of emerging markets into Wall Street.
Chinese blue chips shed 2.4 percent to their lowest in 10 weeks as the education and property sectors were routed on worries over tighter government rules.
That dragged MSCI’s broadest index of Asia-Pacific shares outside Japan down 1.4 percent to its lowest since early January. Japan’s Nikkei did bounce 1.4 percent, but that was off a seven-month low.
In contrast, Nasdaq futures were steady near historic highs, though S&P 500 futures eased 0.3 percent. EUROSTOXX 50 futures and FTSE futures both dipped 0.5 percent.
More than one-third of S&P 500 companies are set to report quarterly results this week, headlined by Facebook Inc, Tesla Inc, Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com.
With just over one-fifth of the S&P 500 having reported, 88 percent of firms have beaten the consensus of analysts’ expectations. That is a major reason global money managers have poured more than $900 billion into US funds in the first half of 2021.
Oliver Jones, a senior markets economist at Capital Economics, noted US earnings were projected to be roughly 50 percent higher in 2023 than they were in the year immediately prior to the pandemic, significantly more than was anticipated in most other major economies.
“With so much optimism baked in, it seems likely to us that the tailwind of rising earnings forecasts, which provided so much support to the stock market over the past year, will fade,” he cautioned.
