Asian stocks slipped back into the red on Tuesday, snapping a three-day winning run, as optimism over an end to high interest rates began to fade, with poor data out of China dampening the mood further.
Investors across the region sold stocks to lock in profits after a sharp rally, with an overnight climb in US Treasury yields flipping sentiment after a positive start to the week.
Meanwhile, data showed China’s imports unexpectedly grew in October, while exports contracted faster than expected, in a mixed set of indicators that showed the recovery in the world’s second-largest economy remains uneven.
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Japan’s Nikkei share average lost more than 1%, snapping its four-session gaining streak.
The Nikkei closed down 1.34% at 32,271.82. The index closed at more than a one-month high in the previous session after gaining 6.5% in four sessions. The broader Topix ended 1.17% lower at 2,332.91.
US Treasury yields climbed overnight as investors grew cautious about large auctions of notes and bonds in a week that could determine whether there is enough demand for US government debt to push rates lower again.
“A pause in declines in the US Treasury yields became a cue for a sell-off for those who wanted to lock in profits,” said Jun Morita, general manager of the research department at Chibagin Asset Management.
Chinese stocks closed down on Tuesday, as fresh trade data underscored a stuttering economic recovery.
The Shanghai Composite Index edged down 0.04%, or 1.14 points, to 3,057.27, while the Shenzhen Composite Index on China’s second exchange was up 0.17%, or 3.25 points, to 1,918.22.
Hong Kong stocks dropped from a three-week high as a government report showed China’s exports slumped for a sixth consecutive month last month.
The Hang Seng Index dropped 1.65%, or 296.43 points, to 17,670.16, while the Tech Index lost 1.04% per cent.
Elsewhere across the region, in earlier trade, equities were also on the back foot, with Sydney, Seoul, Singapore, Wellington and Jakarta down. Mumbai, Taipei and Manila bucked the trend.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2%. Over the previous three sessions, a rally had lifted the benchmark by nearly 6%.
Nasdaq Extends Gains
Treasuries were broadly steady in Asia, having unwound a little of the rally that followed the Federal Reserve’s decision to leave interest rates on hold last week.
Ten-year yields hovered at 4.63%, about 10 basis points (bps) above where they closed on Friday, but well below the 5% mark touched in late October.
In foreign exchange trade, the Australian dollar was the biggest mover, falling about 0.9% to $0.6430 after the Reserve Bank of Australia announced a 25 bp hike, as expected, taking the cash rate to a 12-year high of 4.35%.
On Wall Street, the Nasdaq had logged a seventh straight session of gains on Monday, capping its longest streak since January, though its gain was a slender 0.3% as the rally loses momentum.
A slightly stronger dollar has pushed the Japanese yen back to the weak side of 150 to the dollar, and it hovered at 150.2 in the Asia session. The US dollar index was steady at 105.36.
In commodity markets oil steadied with Brent crude futures at $84.75 a barrel, supported by nerves that conflict in the Middle East could expand and threaten supply and as Russia and Saudi Arabia reaffirmed production cuts.
Gold nursed modest losses at $1,972, while bitcoin hovered just shy of $35,000.
Key figures
Tokyo – Nikkei 225 < DOWN 1.34% at 32,271.82 (close)
Hong Kong – Hang Seng Index < DOWN 1.65% at 17,670.16 (close)
Shanghai – Composite < DOWN 0.04% at 3,057.27 (close)
London – FTSE 100 < DOWN 0.08% at 7,412.18 (0934 GMT)
New York – Dow > UP 0.10% at 34,095.86 (Monday close)
- Reuters with additional editing by Sean O’Meara
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