By Dominique Fong
Shares in Asia slipped as worries about a faltering global economy took the steam out of a multiweek rally.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -2.13% ended Friday down 0.4%, Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.05% lost 0.3% and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.75% fell 0.9%. Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.31% sank 1.2%. China’s domestic stock markets were closed for public holiday.
Stocks across the region generally have risen in recent weeks. One broad gauge, the MSCI AC Asia Pacific ex-Japan index, came into Friday still on track to score a fourth straight week of gains.
But the propellant optimism dissipated as investors became more concerned about slowing U.S. and global economic growth. Earlier this week, the World Bank forecast 2016 global growth at 2.4%, down from the 2.9% it foresaw in January.
“After the rally [in Asian stocks] for the earlier part of June, I think it has started to come off a little bit now, particularly as the [U.S. dollar] starts to strengthen as well,” said Alex Wijaya, senior sales trader at CMC Markets.
The U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.54% , which values the dollar against a basket of currencies, rose 0.6% overnight and was recently at $94.085.
A stronger U.S. dollar tends to pressure commodities prices, and their decline overnight weighed on shares of commodities producers in Asia. In Australia, miners BHP Billiton Ltd. /zigman2/quotes/208108397/composite BHP -3.27% /zigman2/quotes/201448516/delayed AU:BHP -1.01% and Rio Tinto /zigman2/quotes/202627887/composite RIO -4.93% /zigman2/quotes/208934945/delayed UK:RIO -5.97% /zigman2/quotes/200083756/delayed AU:RIO -1.61% slipped 4.1% and 3%, respectively. In Japan, Sumitomo Metal Mining /zigman2/quotes/205273301/delayed JP:5713 -3.67% tumbled 5.3% and Kobe Steel Ltd. /zigman2/quotes/207391157/delayed JP:5406 -2.80% sank 3.1%.
Uncertainty around potentially market-moving events coming this month kept many investors on the sidelines, analysts said.
Next Tuesday, after the New York market close, comes a decision by global index provider MSCI on whether to add mainland China-listed stocks to its influential Emerging Markets Index. Wednesday the U.S. Federal Reserve will emerge from a two-day policy meeting; though an interest-rate increase is virtually off the table, dovish or hawkish tones could still roil markets.
Also discouraging big market bets, Wijaya said, is the June 23 vote on whether Britain should stay in the European Union.
In other markets, the yields on several Asian government bonds sank, a sign that investors were buying them up in the hunt for decent yields at a time of stock-market volatility and expectations of further monetary easing by central banks. A cut in short-term rates can prompt investors to buy longer-tenor bonds for their higher yields. Scotiabank’s currency analyst Gao Qi expects Bank Indonesia to cut interest rates next week.
On Friday, the yield on the benchmark 10-year Japanese government bond /zigman2/quotes/211347248/realtime BX:TMBMKJP-10Y -10.09% hit an all-time low of minus 0.145% in early Asian trading hours. In South Korea, where the central bank cut rates Thursday, the yield on the 10-year government bond /zigman2/quotes/211347257/realtime BX:AMBMKKR-10Y +2.82% hovered at a record low of 1.65%.
The price of gold rose overnight but slid 0.1% in early Asian trading hours to $1,272 per troy ounce.
Brent crude was recently trading at $51.20 per barrel.
—Kwanwoo Jun, Kiroyuki Kachi and Kosaku Narioka contributed to this article.