Asian shares skidded to seven-month lows on Monday as regulation concerns upended Chinese equities and strong US corporate earnings sucked funds out of emerging markets into Wall Street.

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Chinese blue chips shed 2.4 percent to their lowest in 10 weeks as the education and property sectors were routed on worries over tighter government rules.

That dragged MSCI's broadest index of Asia-Pacific shares outside Japan down 1.4 percent to its lowest since early January. Japan's Nikkei did bounce 1.4 percent, but that was off a seven-month low.

In contrast, NASDAQ futures were steady near historic highs, though S&P 500 futures eased 0.3 percent. EUROSTOXX 50 futures and FTSE futures both dipped 0.5 percent.

More than one-third of S&P 500 companies are set to report quarterly results this week, headlined by Facebook Inc, Tesla Inc, Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com.

With just over one-fifth of the S&P 500 having reported, 88 percent of firms have beaten the consensus of analysts' expectations. That is a major reason global money managers have poured more than $900 billion into US funds in the first half of 2021.

Oliver Jones, a senior markets economist at Capital Economics, noted US earnings were projected to be roughly 50 percent higher in 2023 than they were in the year immediately prior to the pandemic, significantly more than was anticipated in most other major economies.

"With so much optimism baked in, it seems likely to us that the tailwind of rising earnings forecasts, which provided so much support to the stock market over the past year, will fade," he cautioned.

The week is also packed with US data that should underline the economy's outperformance. Second-quarter gross domestic product is forecast to show annualised growth of 8.6 percent, while the Fed's favoured measure of core inflation is seen rising an annual 3.7 percent in June.

The Federal Reserve meets on Tuesday and Wednesday and, while no change in policy is expected, Chair Jerome Powell will likely be pressed to clarify what "substantial further progress" on employment would look like.

"The main message from Fed Chair Powell’s post-meeting press conference should be consistent with his testimony before Congress in mid-July when he signalled no rush for tapering," said NatWest Markets economist Kevin Cummins.

"However, he will clearly remind market participants that the taper countdown has officially begun."

So far, the bond market has been remarkably untroubled by the prospect of eventual tapering with yields on US 10-year notes having fallen for four weeks in a row to stand at 1.26 percent.

The drop has done little to undermine the dollar, in part because European yields have fallen even further amid expectations of continued massive bond buying by the European Central Bank.

The single currency has been trending lower since June and touched a four-month trough of USD 1.1750 last week. It was last at USD 1.1775 and looked at the risk of testing its 2021 low of USD 1.1702.

The dollar has also been edging up on the yen to reach 110.40 but remains short of its recent peak at 111.62. The fall in the euro has lifted the dollar index to 92.870, a long way from its May trough of 89.533.

The rise in the dollar has offset the drop in bond yields to leave gold range-bound around USD 1,800 an ounce.

Oil prices have generally fared better amid wagers that demand will remain strong as the global economy gradually opens and supply stays tight.

Brent was trading down 22 cents at USD 73.88 a barrel, while US crude fell 28 cents to USD 71.79.

First Published:Jul 26, 2021 8:53 AM IST