Asian stocks extend their losses for fear of rising inflation | Energy News
Asian stocks slipped to a one-month low on Friday, as rising US Treasury bond yields once again rocked equity investors while pushing the US dollar to a three-month high, pushing the US dollar up to a three-month high. in turn dragged the Japanese yen down.
Energy markets have not been immune to volatility either, with oil prices adding big gains overnight after the Organization of the Petroleum Exporting Countries and its allies (OPEC +) agreed to Essentially maintain their supply cuts in April pending a more solid recovery in demand affected by the coronavirus pandemic.
Australian stocks fell more than 1%, the average Nikkei share in Japan fell 1.6%, and Seoul shares fell 1.4%. Chinese stocks were in the red with the blue chip CSI300 index at 1.5%.
That sent the MSCI Asia-Pacific equity index outside of Japan to 684.52, the lowest since February 1.
E-Mini futures for the US S&P 500 index were 0.5% lower.
U.S. stocks fell on Thursday after Federal Reserve Chairman Jerome Powell disappointed some investors by failing to indicate that the U.S. central bank could step up its long-term bond purchases to keep interest rates at longer term.
The high-tech Nasdaq Composite fell 2.1%, pulling it back about 10% from its record-breaking Feb. 12 close and placing it in correction territory.
Even though Powell has made it clear that the Federal Reserve is not close to changing its ultra-loose monetary policy anytime soon, some analysts were still concerned that the rise in Treasury yields could herald higher borrowing costs, thus limiting the fragile US economic recovery.
“The market was apparently looking for Powell to push back the recent surge in yields harder,” said Ray Attrill, head of currency strategy at National Australia Bank.
“The volatility seen yesterday in the local interest rate markets, with a further significant increase in long-term rates and government bond yields, once again paved the way for a volatile market today, if the developments during the night are an indication. “
Rosier’s economic outlook
Bond investors with a bearish outlook on US Treasury bond prices took confidence in Powell’s words and sold the notes. The yield on 10-year Treasuries climbed above 1.5% to 1.5727%, but still below a one-year high of 1.614% reached last week. Bond yields rise as their prices fall.
The yield curve, a measure of economic expectations, steepened on the rise in yields, with the spread between two-year and 10-year yields widening an additional 6.3 basis points overnight.
Rising yields on treasury bills supported demand for the US dollar. The dollar index jumped to a three-month high of 91.734.
The appreciation of the US dollar hampered the Japanese yen. On Friday morning, the yen fell as low as 107.97 per dollar, the lowest since July 1, although it reduced some of those losses and was last at 107.85.
The euro was also triggered by the stronger dollar, with the European common currency sluggish at $ 1.1960.
Rising yields and the strength of the dollar pushed gold prices down, which fell to a nine-month low as investors sold the precious metal to lower the opportunity cost of holding the asset. unproductive.
Spot gold slipped 0.2% earlier on Friday to $ 1,692.26 an ounce, trading below $ 1,700 for the first time since June 2020.
Oil prices extended their gains early Friday after rising overnight.
US crude futures rose 17 cents, or 0.3%, to $ 64, remaining below a 13-month high on Thursday. Brent rose 10 cents to $ 66.84 a barrel.
In the cryptocurrency market, bitcoin was down 4% to $ 46,422 on Friday.