Asian shares stumble as U.S. yields, dollar hold firm

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HONG KONG, Sept. 29 (Businesshala) – Asian shares fell on Wednesday, tracking a fall on Wall Street, as investors looked at economic uncertainties, pushing up US benchmark bond yields and pushing the dollar to a 10-month high. pushed on.

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Doubts over global recovery are re-emerging at a time when the US Federal Reserve is set to ease stimulus and the Biden administration is mired in controversial debt limit talks that could shut down the government.

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Benchmark 10-year rates have gained 25 basis points in five sessions and were at 1.5513%, their highest level since mid-June a day earlier, while the dollar index stood at 93.752.

“We think the 10-year Treasury yield is likely to be around 1.5% to 1.75%, so they still have room to go,” said Daniel Lam, senior cross-asset strategist at Standard Chartered.

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Lam said the increase in yields was driven by the fact that the United States will certainly begin to reduce its heavy asset purchases by the end of this year, and that it will lead to a shift from growth stocks to price names.

He added that the change would be unlikely to significantly reverse the recent inflows from Asian to US equities as policy moves are currently generally less helpful in Asia than in the United States and Europe, and thus “Asia”. Opportunities in this will be strategic and short-lived.”

Higher yields and a stronger dollar hurt Asian stocks in early trade. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.5% with Australia (.AXJO), and South Korea (.KS11) down 2.06%.

The Hong Kong benchmark (.HSI) was down 1.2% and Chinese blue chips (.CSI300) 1.1%.

Japan’s Nikkei (.N225) hurt 2.35% of the general mood as the country’s ruling party votes for a new leader who will almost certainly become the next prime minister ahead of a general election in weeks.

Overnight, all three major US stock indexes fell nearly 2% or more, with interest rate sensitive tech and tech-adjacent stocks the hardest hit by rising yields.

It was the S&P 500 Index’s (.SPX) biggest one-day percentage drop since May, and the Nasdaq’s biggest drop since March, but US stock futures, the S&P 500 E-Minis, were up 0.25% in Asian hours. Were.

Also on traders’ minds was cash-strapped China Evergrande Group (3333.HK), whose shares rose 12% after it said it would sell a 9.99 billion yuan ($1.5 billion) stake in Shengjing Bank Co Ltd. is planning. 2066.HK).

Evergrande is due to make a $47.5 million interest payment on its 9.5% March 2024 bond, having missed a similar payment last week, but said it would use the proceeds of the sale on the stock exchange to settle its financial liabilities. should be done for. to Shengjing Bank.

In currency markets, a stronger dollar meant the yen was trading near its lowest level since the start of 2020, while the euro hit a one-month low overnight.

The day before, oil prices hit nearly three-year highs. Brent crude fell 0.83% to $78.25 a barrel US crude fell 1.09% to $74.47 a barrel.

Spot gold edged higher at $1,735.6 an ounce, up 0.1% from a seven-week low a day earlier as higher yields hurt demand for non-interest bearing assets.

Editing by Jacqueline Wong


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