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Asian stocks fall as rising bond yields impact shares

Asian stocks were set for a strong open on Tuesday, helped mostly by global recovery prospects and the passage of a US$1.9 U.S. trillion stimulus bill, shaking off a mixed Wall Street session after a big downturn in tech shares.

FILE PHOTO: Pedestrians and a traffic light stop sign are reflected on a quotation board in Tokyo, Japan February 26, 2021. REUTERS/Kim Kyung-Hoon

SYDNEY/NEW YORK: Asian stocks were lower on Tuesday as rising bond yields impacted tech shares and company valuations in China and Korea and investors grappled with their inflation fears as the United States looks set to pass a US$1.9 trillion stimulus package.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.79per cent lower while Korea’s Kospi fell by 1.88per cent, its fourth straight session of losses. Japan’s Nikkei pared back earlier losses in the session to be 0.24per cent higher.

U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s coronavirus aid package would provide enough resources to fuel a “very strong” U.S. economic recovery, and noted “there are tools” to deal with inflation.

Despite the positive cues, investors remain conflicted over whether the stimulus will help global growth rebound faster from the COVID-19 downturn or cause the world’s biggest economy to overheat and lead to runaway inflation.

“The chance of our seeing more inflation in the economy is meaningfully increased by the monetary policy actions and the fiscal policy actions that we’re seeing around the world,” Goldman Sachs Chief Executive Officer David Solomon told a conference in Sydney via webcast.

“There is certainly a reasonable outcome where inflation accelerates more quickly than people are expecting, and that will obviously have an impact on markets and volatility.”

The technology sector and other richly valued companies have been highly susceptible to the rising rates.

Australian shares tracked overnight gains on Wall Street with the main S&P/ASX 200 index climbing as much as 1.04per cent on Tuesday. However, Australian tech stocks slid for the sixth straight session in line with their U.S. peers.

The index gave back those gains to be only 0.40per cent higher in afternoon trading following the tech declines and a 10per cent fall in Insurance Australia Group shares ahead of an announcement regarding the insolvency of financial services provider Greensill Capital.

China’s blue-chips were 1per cent lower while Hong Kong’s Hang Seng advanced 0.9per cent.

On Wall Street, the Dow advanced while the Nasdaq shed over 2per cent, marking a more than 10per cent fall since its Feb. 12 closing high and confirming a correction in the index’s value.

The Dow Jones Industrial Average rose 0.97per cent, the S&P 500 lost 0.54per cent, and the Nasdaq Composite dropped 2.41per cent.

The pan-European STOXX 600 index .STOXX rose 2.10per cent and MSCI’s gauge of stocks across the globe shed 0.02per cent.

“If rates are grinding higher because people are getting optimistic about what economic growth looks like, that is still supportive for equity prices,” said Tom Hainlin, global investment strategist at U.S. Bank Wealth Management’s Ascent Private Wealth Group in Minneapolis.

U.S. treasury yields advanced as investors continued to price in higher inflation and more upbeat prospects for the U.S. economy as it emerges from the coronavirus pandemic.

The benchmark 10-year yield rose to 1.6029per cent, from 1.594per cent late on Monday.

On foreign exchange markets, the dollar index hit a three-and-a-half month high, rising 0.523per cent, with the euro up 0.06per cent to US$1.185.

Oil prices were higher on Tuesday, but failed to recoup the gains on Monday after attacks on oil facilities in Saudi Arabia lifted prices to the highest since the COVID-19 pandemic began.

Brent crude futures were up 33 cents, or 0.51per cent, at US$68.57 per barrel. U.S. crude futures were 27 cents, or 0.42per cent higher at US$65.32.

Spot gold added 0.4per cent to US$1,688.42 an ounce.

(Reporting by Paulina Duran and Matt Scuffham; Editing by Sam Holmes and Christian Schmollingr)

Asian stocks fall as rising bond yields impact shares Source link Asian stocks fall as rising bond yields impact shares

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