BANGKOK – Asian shares skidded on Friday after a rise in bond yields led to a broad sell-off on Wall Street that eroded market gains for the week and forced the Nasdaq index to miss out. as soon as October.
Tokyo, Hong Kong and Sydney all fell 2% or more in early trading on Friday.
The tech-heavy Nasdaq showed 3.5% on Thursday while the S&P 500 fell 2.4%, led lower by heavy sales in technology and communications companies.
The sell-off gained momentum as the yield on the U.S. Treasury’s 10-year pound moved above 1.5%, a level not seen for over a year and well above the 0.92% it was trading at just two months ago. That move lifted the warning on Wall Street that yields, and the flat rates they affect, are moving higher from here.
Early Friday, the yield on the U.S. Treasury 10-year note was at 1.47%.
Nikkei 225 NIK at Tokyo,
lost 2.7%, while the Hang Seng HSI,
in Hong Kong lost 2.4%. Shanghai Composite SHCOMP Index,
lost 1.8%. Kospi Corea a Deas 180721,
declined 3% and Australian S&P / ASX 200 XJO,
slipped 2%.
Shares rose in Malaysia FBMKLCI,
but fell in Singapore STI,
Taiwan Y9999,
and Indonesia JAKIDX,
Bond yields have been rising this month, reflecting growing investor confidence that the economy is on track to recover, but inflation is also expected. higher, which may encourage central banks to raise interest rates to raise prices. Rising yields can make stocks look less attractive compared to bonds for some investors, which is why every second in yield has been matched by a tick in it. their stock prices.
In the past, such situations have stimulated sales in what is known as a “taper tantrum,” referring to a potential reduction in monetary stimulus.
“This feels like a wash of ‘safe’ jobs, and ultimately the market will continue to test the Fed’s intention to keep rates up. We are in a precarious position where any further rebate could be misinterpreted as the Fed losing faith in its own ability to control the market, which would strengthen itself, ”said Stephen Innes. from Axi in a statement.
S&P 500 SPX Index,
fell 96.09 points to 3,829.34. Dow Jones industrial average DJIA,
lost 1.8%, to 31,402.01. The Nasdaq COMP,
slipped 478.54 points to 13,119.43.
The U.S. economy grew at an annual pace of 4.1% in the last three months of 2020, slightly faster than initially expected, the government said. Higher government spending and accelerated vaccine circulation could spur growth in the current quarter, ending in March, to 5% or even higher, economists believe.
Economies in Asia are also booming, although vaccine distribution is lagging behind the U.S. effort and travel restrictions related to pandemic and quarantine requirements are still in place for many countries.
Global stock markets have soared in the past six months amid optimism about coronavirus vaccines and central bank promises of abundant credit to support struggling economies. These sentiments have plummeted due to warnings that the rally could be premature and that inflation could rise.
Federal Reserve Chairman Jerome Powell has reaffirmed the Fed’s commitment to low interest rates as evidence for lawmakers in Washington this week.
The central bank had indicated earlier that it would allow the economy to run hot to ensure a recovery is in place after the deepest recession since the 1930s. Powell said it may take more than three years to hit the Fed ‘s target of 2% inflation.
Investors are also looking for Congress to approve the economic support plan proposed by President Joe Biden. That includes $ 1,400 surveys for most Americans. However, Republicans are strongly opposed to the plan and remain subject to negotiations. Democrats have chosen to use the so-called legislative process that would allow them to pass the bill without GOP support.
In another trade on Friday, U.S. crude oil benchmark CLJ21,
posted 36 cents to $ 63.17 a barrel in e-commerce on the New York Mercantile Exchange. He earned 31 cents to $ 53.22 a barrel on Thursday. Brent crude BRNJ21,
the international standard, it brought up 29 cents to $ 65.82 per barrel.
The USDJPY dollar,
it fell to 105.98 yen Japanese from 106.20 yen on Thursday.