By Scott Murdoch
3 minutes to read
Pedestrians wearing protective masks, amid the outbreak of the coronavirus disease (COVID-19), reflect on an electronic board outside a brokerage in Tokyo.
Pedestrians wearing protective masks, amid the coronavirus disease (Covid-19) outbreak, reflect on an electronic board showing stock prices of various companies outside a stockbroking in Tokyo, Japan, February 25, 2022. REUTERS/Kim Kyung-Hoon
Hong Kong, April 12 (BNA): Asian stocks fell while the US dollar remained strong on Tuesday, with Treasury yields rising to a three-year high ahead of US inflation data that could portend further interest rate hikes from the Federal Reserve. .
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%, after US stocks ended the previous session with moderate losses, Reuters reported.
Australian shares shed 0.65%, while Japan’s Nikkei shed 1.5%.
Higher US bond yields were supporting the dollar, as the US currency index against six peers fell back above 100 to test last week’s high near two years.
The Japanese currency bore the brunt of the losses against the dollar, which rose to 125.77 yen overnight, its highest level since June 2015.
The yen has remained at gunpoint in recent months as the Bank of Japan sticks to a super easy policy even as several other major central banks, led by the Federal Reserve, have embarked on tightening monetary conditions.
The euro was hit by politics, unable to sustain gains from its mini rally on Monday after French leader Emmanuel Macron defeated far-right rival Marine Le Pen in the first round of the presidential vote.
It last settled at $1,087.
“US stocks fell on Monday as investors became increasingly concerned that the benchmark 10-year US Treasury yield would begin to slow the economy, and looked to the upcoming earnings season for signs of inflation affecting corporate earnings,” research analysts Ord Minnett wrote to clients. Tuesday.
China’s markets gained as signs emerged that some tough restrictions were beginning to ease in the country’s financial capital. Read more
Global markets have been hit hard in the past few months by fears of the Ukraine war, Fed tightening and tough new restrictions imposed by China on COVID-19 that could hamper global growth.
Hong Kong’s Hang Seng Index is up 0.6% in early trading Tuesday, while China’s CSI300 Index is up 0.4%.
Technology stocks weighed on Wall Street during Monday’s session with the Dow Jones Industrial Average down 1.19%, the S&P 500 losing 1.69%, and the Nasdaq Composite down 2.18%. All 11 S&P 500 sectors fell.
Economists polled by Reuters had expected the US consumer price index on Tuesday to increase 8.4% year-on-year in March. Read more
Economists at NatWest Markets expected a 1.1% month-over-month jump in the headline inflation number which would be the biggest monthly gain since June 2008.
“We are very hawkish in terms of rate hikes in the US and we believe that’s not just the amount of tightening but the pace that will affect investors,” Elizabeth Tian, director of equity derivatives at Citigroup in Sydney, told Reuters.
“Equity markets have been very resilient and quite relaxed compared to fixed income markets, but we expect at the Fed meeting in May that there will be some kind of announcement in terms of quantitative easing, and that is when we can see the volatility emerging in equities.
“The question will be how the markets react to the speed of interest rate hikes that we could see.”
Early in the Asian session, the yield on the benchmark 10-year Treasury rose to 2.8107% compared to its US close of 2.782% on Monday.
The two-year yield was up as traders expected a Fed funds rate hike, and it touched 2.5242% compared to the US close at 2.508%.
US crude rose 0.85% to $95.09 a barrel. Brent crude rose to $99.18 a barrel.
Gold was a little lower. Spot gold was trading at $1,951.45 an ounce.