Hong Kong, Jan. 5 (BNA): Asian stocks fell on Wednesday after a mixed session on Wall Street as rising US Treasury yields weighed on global technology companies and pushed the dollar to a five-year high against the Japanese yen.
US yields rose on Tuesday as bond investors prepared to raise interest rates from the Federal Reserve by mid-year to curb high inflation.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.8%, while Japan’s Nikkei was little changed.
US stock futures were also lower, with the S&P 500 e-minis down 0.25% and the Nasdaq e-minis losing 0.4%.
“From an Asia point of view, it’s a bit more of a tone of risk-off because it’s one of those days when higher bond yields are a bad thing, and while it reflects a stronger US background, it tends to be more dollar supportive than domestic,” said Rob. Carnell, head of Asia Pacific research at ING, according to Reuters.
“But it’s very volatile, and tomorrow we might go back to thinking that higher returns reflect a stronger global backdrop,” Carnell said.
He said the overnight declines in the Nasdaq due to higher yields weighed on Asian stock markets given the greater importance of technology stocks in the region.
Hong Kong-listed tech stocks lost 3.7% in early trading, while in Japan, Nintendo slumped 1%, and in South Korea, Samsung slid 2% ahead of its quarterly results.
US stocks were mixed on Tuesday with the heavy Nasdaq losing 1.3%, although higher yields boosted by banks and industrial names helped the Dow Jones Industrial Average to a record high close and the S&P 500 to touch an all-time high of the day.
Five-year US bonds, which reflect expectations of a rate hike, rose to their highest since February 2020, after US two-year bond yields hit their strongest level since March 2020 on Monday.
US 10-year Treasury yields touched a six-week high on Tuesday and were last at 1.657%.
The minutes of the Federal Reserve’s December meeting, scheduled for 19:00 GMT, could confirm US policy makers’ new sensitivity to inflation and their willingness to tighten policy.
“The market is now speculating that a rate hike in March is possible when the Fed stops buying assets, so yields rise,” said Edison Bohn, chief market analyst at Saxo Markets in Hong Kong.
He said he believed declines in technology stocks would be short-lived, while higher returns would help bank stocks.
Hong Kong-listed HSBC shares rose 2.3% on Wednesday, although Chinese bad debt manager Huarong lost 40% when trading resumed after a suspension.
In the currency markets, the yen was at 116.7 per dollar after dropping to an overnight low of 116.34, its lowest since March 2017.
With the BoJ widely expected to be late if not last on the waiting list to raise interest rates, the gap between US and Japanese yields is rising, hurting the yen.
The Euro was also in a weak position with the European Central Bank likely to slow in raising interest rates. As a result, the dollar index that tracks the greenback against six peers was at 96.272, the stronger end of its recent range.
Oil prices fell on Wednesday, giving up some of the previous session’s gains. Brent crude futures fell 0.3 percent to $ 79.73 a barrel, after reaching $ 80.26 a barrel, while US West Texas Intermediate crude futures lost 0.3 percent to $ 76.75 a barrel.
Spot gold was at $1,814 an ounce, flat during the day and at the upper end of its recent range.
HF