* S&P500 slips from record high after earnings
disappointment
* Alphabet, Intel jump in after-hour trade
* Bond yields off lows after ECB holds off rate cuts
* ECB widely seen easing its policy in Sept
* European stock futures point to mixed openings
By Hideyuki Sano
TOKYO, July 26 (Reuters) - Asian share prices dropped on
Friday following mixed U.S. earnings reports and after the
European Central Bank disappointed those investors who had
expected an immediate easing while the euro held above two-year
lows struck overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS dropped 0.53% while Japan's Nikkei .N225 lost
0.58%. Shanghai shares .SSEC ticked down 0.16%.
European stocks are seen almost flat, with pan-European Euro
Stoxx 50 futures STXEc1 up 0.03%, while German DAX futures
FDXc1 were up 0.15% and FTSE futures FFIc1 down 0.13%.
Wall Street shares fell from record highs on Thursday, with
the S&P 500 .SPX losing 0.53%, following a flurry of downbeat
quarterly results from Ford Motor F.N and other companies. .N
But several companies that announced results after the
market had closed on Thursday generally beat expectations, and
their shares rose in after-hours trade.
Google parent Alphabet GOOGL.O jumped 7.9%, Intel Corp
INTC.O 5.1% and Starbucks SBUX.O 6.6%. Amazon AMZN.O ,
however, dipped 1.6% on its first profit miss in two years.
U.S. stock futures ESc1 rose 0.23% in Asia.
"Some capital goods makers have reported soft earnings but
otherwise U.S. earnings have been generally good, partly because
investors had already lowered their expectations," said Hitoshi
Asaoka, senior strategist at Asset Management One.
"Still, with U.S. share prices already at record levels,
further gains are likely to be limited unless we see clearer
signs of recovery in global demand," he said.
Uncertainties over whether Washington and Beijing will be
able to settle gaping differences over trade, technology and
even geopolitical ambitions, kept many investors on guard.
Negotiators from the two sides will meet in Shanghai next week.
A rally in global bonds ran out of steam after European
Central Bank President Mario Draghi cautioned about pulling the
trigger too quickly on policy easing, even though he all but
pledged to loosen monetary settings further as the growth
outlook deteriorates. Many market players had thought Draghi could cut rates on
Thursday.
ECB officials told Reuters after the meeting that an
interest rate cut in September appeared certain, while
government bond purchases and a revamped policy message were
also likely. The euro's overnight index swaps EUROIS are pricing in a
cut of more than 10 basis points in September, to minus 0.50
percent.
"An interest rate cut of 10 basis points in September looks
like a done deal now," said Hideki Kishida, fixed income
strategist at Nomura Securities.
The 10-year German government bond yield DE10YT=RR
initially hit a record low of minus 0.463 percent but ended the
day up slightly at minus 0.407 percent.
While European bond yields are likely to stay under pressure
until the next ECB meeting on Sept 12, Brexit could become a
central issue as investors look to the stance of Britain's new
government under Boris Johnson.
"If there are signs of easing tensions, we could see
temporary rise in European bond yields," Nomura's Kishida said.
The U.S. 10-year Treasuries yield also rose 3 basis points
to 2.079 percent US10YT=RR on Thursday and last traded at
2.107 percent.
Also helping to stem falls in bond yields, new orders for
key U.S.-made capital goods surged in June, suggesting some
improvement in business investment. Despite that, investors expect the Federal Reserve to cut
interest rates by 0.25 percentage point at its policy meeting
ending on July 31 to protect the economy from potential damage
from the protracted U.S.-China trade war.
An advance reading of U.S. GDP, due at 8:30 a.m (1230 GMT),
is expected to show the economy grew 1.8% in April-June, which
would be the slowest growth in more than two years.
In the currency market, the euro bounced back to at $1.1149
EUR=EBS in Asian trade, after sinking to $1.1101 on Thursday,
its lowest since May 2017.
The yen was little changed against the dollar at 108.62 yen
per dollar JPY=EBS .
Oil prices held firm on rising tensions between the West and
Iran and a big decline in U.S. crude stockpiles, though gains
were held in check by worries about slowing growth in major
economies.
U.S. crude CLc1 ticked up 0.36% to $56.22 a barrel while
Brent futures LCOc1 were up 0.16% at $63.49 per barrel.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. GDP growth https://tmsnrt.rs/2yf7ruR
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Simon Cameron-Moore & Kim Coghill)