Asian shares skid as rising U.S. yields hit tech stocks


HONG KONG: Asian stocks fell on Wednesday as increased U.S. Treasury yields weighed on world tech companies and pushed the greenback to a five-year excessive towards Japan’s yen.

U.S. yields rose on Tuesday as bond traders equipped for rate of interest hikes from the Federal Reserve by mid-year to curb stubbornly excessive inflation.

The shift in market focus again to prospect for U.S. rate of interest hikes has revived a rotation out of growth-sensitive stocks, such as tech companies, into ones that supply earnings, such as financials and industrials.

MSCI’s broadest index of Asia-Pacific shares exterior Japan misplaced 1%, after hitting a three-week excessive the day earlier than, whereas Japan’s Nikkei was little modified.

U.S. inventory futures additionally slipped with S&P 500 e-minis down 0.25% and Nasdaq e-minis dropping 0.48%. European Stoxx 50 futures have been flat.

“From Asia’s perspective, it is a barely extra risk-off tone as a result of it is a type of days the place increased bond yields are a foul factor, as, though they mirror a stronger U.S. backdrop, they are usually supportive of the greenback quite than native currencies,” mentioned Rob Carnell, head of Asia Pacific analysis at ING.

“But it is fairly uneven, tomorrow we would get again to pondering the upper yields mirror a stronger world backdrop,” Carnell mentioned.

He mentioned declines within the Nasdaq have dragged on Asia’s large tech stocks.

In Japan, Nintendo slipped 1.7% and South Korea’s Samsung shed 2.5%.

In Hong Kong, tech stocks misplaced 3.7% with added stress coming from China’s fines on Alibaba, Tencent, and Bilibili.

U.S. shares have been blended on Tuesday with the tech-heavy Nasdaq falling 1.3%, though rising yields boosted banks. Industrial names helped the Dow Jones Industrial Average to a report closing excessive and the S&P 500 to the touch an all-time intraday excessive.

U.S. five-year notes, which mirror fee hike expectations, soared to their highest since February 2020 on Monday, whereas two-year observe yields hit their strongest degree since March 2020.

Benchmark U.S. 10-year treasury yields touched a six-week excessive on Tuesday and have been final at 1.6473%.

Minutes from the Fed’s December assembly, due at 1900 GMT, might spotlight U.S. policymakers’ newfound sensitivity to inflation and their readiness to tighten coverage.

“The market is now speculating {that a} March fee hike is feasible when the Fed stops buying property, due to this fact yields are rising,” mentioned Edison Pun, senior market analyst at Saxo Markets in Hong Kong.

He mentioned he thought declines in tech stocks could be short-lived, whereas rising yields would assist banking stocks.

HSBC’s Hong Kong-listed shares rose 2.3% on Wednesday, although Chinese dangerous debt supervisor Huarong misplaced 50% as buying and selling resumed after a nine-month suspension, giving traders the prospect to revalue the embattled firm.

On the mainland, China Mobile gained 3.4% on their Shanghai debut on Wednesday after the corporate raised $7.64 billion within the nation’s greatest public share providing in a decade.

In foreign money markets, the yen was at 116.04 per greenback having dropped to 116.34 in a single day, its lowest since March 2017, whereas the greenback index, which measures the buck towards six friends, was at 96.226, the stronger finish of its latest vary.

With the Bank of Japan broadly anticipated to be late if not final within the queue to hike charges, the hole between U.S. and Japanese yields are rising, hurting the yen.

Oil costs have been regular having gained within the earlier session. Brent crude futures have been flat at $79.99 a barrel whereas U.S. crude futures have been at $76.75 a barrel.

Spot gold was at $1,814 an oz, regular on the day and on the higher finish of its latest vary. – Reuters

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