Business News: Asian markets pull back on fears of inflation and interest rate hikes.
Shares fell in Asia on Wednesday as investors considered the possibility that inflation could prompt central banks to adjust their ultra-low interest rate policies.
Hong Kong’s Hang Seng HSI, -2.99%, led the decline with a 2% loss. The Nikkei 225 NIK, -1.61% in Tokyo lost 0.9% and in Seoul the Kospi 180721, -2.45% was 0.9% lower. Australia’s S & P / ASX 200 XJO, -0.90%, lost 1%, while Shanghai’s SHCOMP Index, -1.99% fell 1.5%. Shares earned in Singapore STI, + 1.17%, fell in Taiwan Y9999, -1.40% and Indonesia JAKIDX, -0.35%.
Investors remain increasingly focused on a sharp rise in bond yields and how it affects equity valuations.
The large amount of stimulus pumped into economies has been a factor that has pushed bond yields higher, giving some investors a pause as it rekindles concerns about inflation, which has been nearly non-existent for more than a decade.
The 10-year Treasury note yield, which rose recently, held steady Wednesday at 1.34%.
As bond yields rise, stock prices tend to be negatively affected as investors direct an increasing portion of their money into the more stable income stream provided by bonds.
Jay Powell, chairman of the Federal Reserve, told Congress Tuesday that the Fed did not see the need to change its ultra-low interest rate policy, noting that the economic recovery remains “erratic and distant. from to complete.”
The message appeared to be disabled in Asia.
“Rising borrowing costs remain the dominant issue, although Fed Powell’s dovish comments helped halt the decline in US stocks on Tuesday,” IG’s Jingyi Pan said in a comment.
“However, despite the reassuring comments about lower interest rates from US Federal Reserve Chairman Jerome Powell, Asian markets continued to consider concerns about rising bond yields, ”Pan said.
A flurry of Wall Street buying late Tuesday afternoon helped largely reverse a tech-focused sell-off and pushed the S&P 500 SPX, + 0.13%, to its first gain after a streak of five. days.
The benchmark index posted a gain of 0.1% to 3,881.37. The DJIA Dow Jones Industrial Average, + 0.05%, was also up 0.1%, to 31,537.35. The Nasdaq COMP, -0.50% lost 0.5%, to 13,465.20. The indices were at an all-time high less than two weeks ago.
In other exchanges, the US benchmark crude oil CLJ21, lost 0.32% 52 cents to $ 61.15 a barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents on Tuesday to $ 61.67 a barrel. Brent crude oil BRNJ21, 0.50%, the international standard, lost 39 cents to $ 64.09 a barrel.
The US dollar USDJPY, 0.50% rose to 105.44 Japanese yen from 105.24 yen late Tuesday.