Asian stocks drift lower despite yet another Wall St record

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Hong Kong (AFP)

Asia stocks drifted lower Tuesday despite yet another record close on Wall Street, as investors focused on upcoming US inflation data for fresh clues about the direction of the American economy.

The Dow Jones eked out a ninth straight all-time high Monday, as a strong second-quarter earnings season continued to attract more funds to US equities, while the tech-heavy Nasdaq also advanced.

But regional bourses paused for breath in light summer holiday trading after recording healthy gains Monday on strengthening faith in the health of the world economy spurred by a better-than-expected US jobs report for July.

In Tokyo, a stronger yen, which weighs on exporters' profits, capped the Japanese market's gains, as the greenback started to give up gains from Friday's robust US jobs data.

The Nikkei was off 0.3 percent by the break, also dragged down by tech giant SoftBank slipping into negative territory, while Hong Kong was flat in morning trade and Shanghai was marginally lower as figures showed Chinese imports and export growth missed forecasts in July.

Analyst said recent rises in equities in the US and Asia had been driven by strong earnings.

"The message from corporate CEOs around the world was loud and clear," said Chris Weston, chief market strategist at IG Markets.

"They are not concerned with Trump, geopolitics or trade restrictions, they see earnings growth as the main game in town and equity investors are aligned with this outlook."

Market watchers are now eyeing whether the US blue-chip index can match the all-time run of gains seen in January 1987, Weston added.

However, Chinese trade growth slowed significantly in July compared to the previous month, official data showed Tuesday, coming in well below expectations after months of steady momentum.

- Focus on US inflation -

"Overall exports and imports are still resilient," Raymond Yeung, chief greater China economist at ANZ in Hong Kong, said in a Bloomberg Television interview.

In the longer term, the dramatic shift of the world's largest trading nation to a consumer economy after decades serving as factory to the world is an increasingly central pillar driving global growth.

Traders are now turning their focus to US inflation data out Friday for clues on monetary policy in the world's top economy.

Federal Reserve speakers overnight said soft US inflation was a problem as they played down the risk of market disruption when the central bank starts shrinking its balance sheet.

The comments reinforce market expectations officials will keep interest rates on hold next month, putting pressure on the greenback.

The dollar was weakening on forex trade Tuesday, sliding beneath 1.18 to the euro and at about 110.6 yen.

But analysts said moves this week could be muted.

"Given the enormity of inflation metrics in the Fed's rates outlook, I suspect traders will be reluctant to commit big views prior to the event and even more so given August's sparse liquidity conditions," said Oanda analyst Stephen Innes.

On commodities markets, the softer dollar failed to prop up oil, with crude sliding as a meeting of leading oil-exporting countries continues to examine why some producers were failing to fully implement cuts to rein in global supply.

-- Bloomberg News contributed to this report --

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.3 percent at 19,992.17 (break)

Hong Kong - Hang Seng: DOWN less than 0.1 percent at 27,687.23

Shanghai - Composite: DOWN 0.2 percent at 3,274.46

Euro/dollar: UP at $1.1813 from $1.1794

Pound/dollar: UP at $1.3047 from $1.3030

Dollar/yen: DOWN at 110.64 yen from 110.76 yen

Oil - West Texas Intermediate: DOWN 18 cents at $49.21 per barrel

Oil - Brent North Sea: DOWN 22 cents at $52.15

New York - Dow: UP 0.1 percent at 22,118.42 (close)

London - FTSE 100: UP 0.3 percent at 7,531.94 points (close)