Shanghai, June 9 (BNA): Asian stocks tumbled, US bond yields rose, and a surging dollar pushed to a two-decade high against the yen on Thursday as investors worried about expectations for further interest rate hikes ahead of the main European Union meeting. Central Bank later today.
But before the meeting, at which the European Central Bank prepares to end its asset purchase program and signal interest rate hikes to combat rising inflation, moves in the Asian session were relatively muted as many investors remained on the sidelines, Reuters reports.
said Matt Simpson, chief market analyst at City Index in Sydney.
“It’s the most exciting meeting since she (Christine Lagarde) has been at the helm, since Draghi has been here – ‘whatever it takes’.”
Adding to concern about European inflation, data showed that the euro zone economy grew faster in the first quarter than the previous three months, despite the war in Ukraine.
As investors speculate on the size and pace of the European Central Bank’s tightening, they are also waiting for US consumer price data on Friday which the White House said it expects to be “up”. Economists expect an annual inflation rate of 8.3%, according to a Reuters poll.
And while Asian stock markets are up about 8% from the nearly two-year lows touched last month, investors remain concerned that the central bank’s tightening policy to control inflation could lead to an economic slowdown.
In morning trading, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.39%, tracking losses in US stocks in the previous session.
Australian shares slipped 1.19% and Seoul’s Kospi slipped 0.64%, although Hong Kong’s Hang Seng gained less than 0.2% and Chinese A shares settled.
In Japan, the Nikkei is also unchanged.
Overnight, the Dow Jones Industrial Average fell 0.81%, the S&P 500 lost 1.08% and the Nasdaq Composite lost 0.73%.
“Over the past two weeks, trading has been in a very narrow range and has also relied on very low volumes,” analysts at ING said in a note.
They warned that “previous cases of this range of trading in low volumes usually precede a sharp bearish turn,” adding that the European Central Bank meeting and US price data on Friday were likely “catalysts for a more bearish outlook.”
The wait for US price data also affected US Treasuries, which saw yields soar after a weak 10-year auction on Wednesday.
The US 10-year yield on Thursday rose to 3.0548% from a US close of 3.029% on Wednesday, and the two-year yield rose to 2.8027% compared to the US close at 2.774%.
Higher yields boosted the dollar, especially against the yen, which fell to a 20-year low of 134.56. The Japanese currency was affected by the widening policy divergence, with the Bank of Japan remaining as one of the few global central banks that maintained a dovish stance.
The global dollar index was slightly higher at 102.6, and the euro was flat ahead of the European Central Bank meeting at $1.0712.
Crude oil prices extended gains, rising to three-month highs on hopes of strong demand from the United States and a recovery in China as COVID-19 restrictions ease.
Global benchmark Brent crude was last at $123.83 a barrel, up 0.2% on the day. And US crude rose 0.17 percent to $ 122.32.
Gold was weaker, which was sensitive to higher interest rates but is seen as an inflationary advantage. And spot gold lost 0.1 percent to 1851.35 percent an ounce.