* MSCI ex-Japan reverses early gains, decreases from 3 weeks
* Chinese HK shares lower, CSI300 index down 1%
* The dollar softens to a two-week low
* Crude oil prices rise in hopes of economic recovery
SYDNEY, April 7 (Reuters) – Asian equities retreated on Wednesday from a three-week high, dragged down by Chinese equities, although investors were still focused on the company’s future gains for more signs of global economic recovery.
Eurostoxx 50 futures fell 0.1%, those for Dax in Germany were barely changed, while FTSE futures in London rose 0.4%. E-Mini futures for the S&P 500 were largely flat.
Previously, the broadest MSCI index of Asia-Pacific equities outside of Japan had started on a firm basis, reaching 697.01 points, a level last seen on March 18.
However, it succumbed to selling pressure and fell 0.1% last time after shares in China and Hong Kong opened in the red following a strong rally last week.
China’s CSI300 bluechip index fell about 1%, while Hong Kong’s Hang Seng index fell 0.8%.
Geopolitical tensions in the region have added to the nervousness.
Taiwan’s foreign minister said on Wednesday that he would fight to the end if China attacked, adding that the United States saw the danger of this happening amid rising Chinese military pressure, including aircraft carrier exercises, near the island.
Other Asian markets were still positive.
Nikkei in Japan was up a bit, while Australian shares rose 0.6% and KOSPI in South Korea added 0.3%. New Zealand ended 0.7% higher.
Overall, the successful launch of vaccines in the United States and the United Kingdom, along with strong macroeconomic data, have boosted investors’ risk appetite, helping emerging market stocks and assets.
“The US economy is facing the first effects of a powerful vaccine with a double dose of broad inoculation and fiscal stimulus,” said David Kelly, global market strategist at JP Morgan Asset Management.
“The reality is that forecasts remain very uncertain … (but) early signs show that recovery is accelerating, suggesting a faster return to ‘normal’ than many dared to hope a few months ago,” Kelly added.
Overnight, the three major Wall Street indices closed lower, a day after the S&P 500 and Dow rose to record levels, driven by a stronger-than-expected job ratio last Friday, and data showing a dramatic recovery in the US service industry on Monday.
Investors also weighed the latest US job report, which showed vacancies rose to a two-year high in February, while employment had the biggest gain in nine months. , amid rising COVID-19 vaccinations and additional government incentives.
Moreover, the International Monetary Fund raised its overall growth forecast to 6% this year from 5.5%, reflecting a rapid outlook for the US economy.
The next earnings season is expected to show a 24.2% increase in S&P profit from a year earlier, according to Refinitiv data, and investors will see if corporate results continue to confirm recent positive economic data.
Elsewhere, all eyes will be on the minutes of the US Federal Reserve’s political meeting, with a rally in the US Treasury extending through Wednesday. Ten-year yields fell to 1.6455% from 1.776% on March 30.
Five-year US Treasury yields fell sharply to 0.874%, weighing on the US dollar.
The five-year Treasury yield is seen as a major barometer of the amount of confidence investors have in the Federal Reserve’s promise not to expect interest rates to rise until 2024.
The dollar returned from a two-week low of 92,246 against a basket of world currencies.
The euro was flat at $ 1.1874, the pound was slightly weaker at $ 1.3788, while the Japanese yen was slightly lower at 109.77.
On commodities, gross futures contracts were fixed at $ 63.74 a barrel, while US crude rose 2 cents to $ 59.35.
Gold on the spot was at a touch of $ 1,741.4 per ounce.
Reporting by Chibuike Oguh in New York and Swati Pandey in Sydney; Editing by Christopher Cushing, Ana Nicolaci da Costa and Kim Coghill