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Asian shares begin cautiously amid greater valuations and oil slides

© Reuters. Individuals wearing protective masks following the coronavirus disease (COVID-19) outbreak appear on a screen showing stock prices outside a broker in Tokyo

From Swati Pandey

SYDNEY (Reuters) – Asian stocks started on their hindfoot on Monday as investors grappled with sky-high valuations against a backdrop of a global economy amid a deep coronavirus recession while oil prices fell sharply.

was down 0.4% ago a heavy week of macro data, with household spending, current account and gross domestic product figures due Tuesday.

Some analysts expect a new dose of fiscal stimulus in the country before the end of the year, while predicting Abenomics will continue after Japanese Prime Minister Shinzo Abe resigns.

Australian stocks were down 0.4%, while the benchmark indices for South Korea and New Zealand fell 0.1% each.

That said, MSCI's broadest index for stocks in the Asia-Pacific region outside of Japan has changed little after two straight days of losses plunging it from a 2-1 / 2-year high last week.

World stocks hit record highs last week as central bank incentives drove asset valuations to intoxicating levels. The rally cooled late last week as technology stocks sold and worries about a mixed economic recovery weighed on investors.

The immediate focus of the day will be on China's August export and import data due later this morning.

China's exports are likely to have seen a second month of solid gains in August as more trading partners eased coronavirus lockdowns and reopened their economies, a Reuters poll showed.

U.S. stock futures are in the red, with e-minis for the S&P 500 down 0.3% and Nasdaq futures down 1.1%. U.S. markets will close for Labor Day on Monday.

Nasdaq futures were dragged down by the exclusion of Tesla (NASDAQ 🙂 from a group of companies added to the S&P 500.

Jefferies (NYSE 🙂 analysts expect the stock market correction to widen further.

"Our risk indices have started to pull away from their euphoric highs," said Jefferies.

"It is not unthinkable that global stocks will move in one area for a while as some of the orphaned sectors / countries are being re-licensed while the highly valued sectors pause or relax," he added.

"In terms of probabilities, last week's correction has some leeway."

Jefferies said he would change his weighting in the MSCI All World Index to "tactically bearish" in the short term.

A measure of volatility was found to have increased over the past three months, along with a steepness in the US 10-year to 5-year government bond yield curve and the 30-year to 5-year curve.

"We wonder how much movement in either area would disrupt the stock market," Jefferries said.

Later this week, investors will be looking for data on US inflation, with both producer and consumer prices expected to remain broadly stable.

"With years of slack in the labor market and the broader economy, it is difficult to see where sustained higher inflation is coming from," Brown Brothers Harriman said in a note.

"That said, the bottom line is that US rates will stay lower for longer. Period."

For commodities, oil prices fell more than $ 1 a barrel, reaching their lowest level since July, after Saudi Arabia made the lowest monthly price cuts for supplies to Asia in five months.

Declining optimism about the recovery in demand amid the coronavirus pandemic also had a negative impact. fell 2% to $ 38.97 a barrel. slipped 1.9% to $ 41.85.

Political meetings at the Bank of Canada on Wednesday and the European Central Bank (ECB) the following day are also on investor radar, with both predicting stable policies.

Action in the forex market has been subdued.

In currencies, the dollar was flat against the yen at 106.27 while the euro held at $ 1.1838.

The British pound was slightly weaker at USD 1.3248 ahead of a new round of Brexit talks with the European Union on Monday.

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