Asian stocks off record highs as Wall St flags

Asian stocks retreated from record peaks on Tuesday after a selloff in Apple shares knocked Wall Street, while the dollar found support as US bond yields climbed to near four-year highs. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent after rising to a record high the previous day.

Australian stocks shed 0.65 per cent, South Korea's KOSPI lost 0.3 per cent and Japan's Nikkei dropped 0.5 per cent. The bearish sentiment in Asia followed a softer lead from Wall Street, which has led a global equities rally over the past year thanks to strong world growth fuelling higher corporate earnings and stock valuations.

On Monday, US stocks pulled back from record highs, with the Dow and the S&P 500 indexes marking their biggest one-day percentage declines in about five months, weighed down by a slide in Apple shares.

The dollar, however, enjoyed a reprieve from some persistent selling in the past few weeks. Buoyed by higher US yields, the dollar index against a basket of six major currencies was at 89.336, having bounced away overnight from a three-year low of 88.438 plumbed on Friday when peers like the euro outshone the greenback.

The 10-year Treasury note yield surged above 2.70 per cent to its highest since April 2014 on Monday after comments from a European Central Bank official added to expectations that central banks globally will reduce stimulus as the economic outlook improves. “This is a rise in real interest rates, also reflecting a rise in inflation expectations. Therefore it is a benign yield rise,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo. “The yield rise may have bumped off US stocks from highs, but a correction was due after their recent gains,” Ichikawa said.

The euro was steady at $1.2381 after slipping overnight from a three-year top of $1.2538. The dollar was virtually flat at 108.975 yen following its descent to a four-month low of 108.280 on Friday. The Australian dollar was steady at $0.8097 after reaching $0.8136 on Friday, its highest since May 2015.

Oil prices extended losses after being pressured by the dollar's bounce and rising US crude output. US crude futures were down 0.1 per cent at $65.48 per barrel. Underpinned by the dollar's recent slide, prices had risen to $66.66 per barrel on Thursday, the highest since December 2014.

Spot gold was little changed at $1,340.86 an ounce after dropping 0.7 per cent the previous day on the back of the stronger US currency.