Asia’s stocks were reeling on Wednesday, hit by bond market turbulence as US yields surged to 16-year highs, pressurising equity valuations and souring investor appetite.
Stronger-than-expected US job openings data sent the 10-year yield up nearly a dozen basis points (bps) on Tuesday, pulling money from all corners into dollars.
Japan’s Nikkei share average fell to an over four-month low, tracking overnight Wall Street declines on those Treasury yields.
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The Nikkei dropped 2.28%, or 711.06 points, to close at 30,526.88, after falling to 30,487.67 for the first time since May 18. The broader Topix was down 2.49%, or 56.58 points, to 2,218.89.
Among the Tokyo Stock Exchange’s 33 industry groups, transport equipment makers fared worst, dropping 4.9%. Banking was another major loser, sliding 4.3%.
“There’s so much uncertainty about the US outlook and that’s weighing on Japanese stocks,” Daiwa Securities strategist Kenji Abe said.
Hong Kong stocks extended their losses to a second session as the sell-off in global bond markets hit its equity market, with investors also waiting on China’s Golden Week holiday data.
The Hang Seng Index retreated 0.78%, or 135.38 points, to 17,195.84 and the Hang Seng China Enterprises Index declined 1.12%. The Hang Seng Tech Index tumbled 1.71%.
Market turnover, though, remains low as the China-Hong Kong Stock Connect programme is closed for the golden week in mainland China.
Total domestic tourism revenue for the first three days of the week jumped 125% year-on-year to over 340 billion yuan ($46.57 billion), official data showed.
Elsewhere across the region, in earlier trade, Seoul which resumed trade after a long holiday weekend, led the Asian selloff. Mumbai, Taipei, Jakarta, Singapore, Sydney and Wellington were all lower in a sea of red.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by more than 1% for a second day running.
Dollar Soars, Yen Under Pressure
The spike in Treasury yields lifted the dollar to new heights with only the yen showing some fight amid speculation the Japanese authorities might be intervening behind the scenes.
The yen breached the 150-per-dollar level in the London afternoon on Tuesday before suddenly shooting to 147.3. S&P 500 futures fell 0.3% and European futures fell 0.2%.
Across Asia’s emerging markets bonds were also under pressure and the Thai baht, Taiwan dollar, Malaysian ringgit, Indonesian rupiah and Indian rupee were all at, or near, milestone lows, with some central banks stepping in to stem the tide.
For the yen, its slide back past the weak side of 149-per-dollar suggested some scepticism around whether Japan’s finance ministry had really ordered an intervention, though it was enough to quieten short sellers.
At $0.6304 the Australian dollar was pinned near an 11-month low while the New Zealand dollar was just above a similar milestone after the central bank left rates on hold and offered little suggestion of an imminent hike.
Federal Reserve officials see rising yields on long-term US Treasury debt as not triggering alarm bells yet.
In commodity markets, the stronger dollar has helped put the brakes on oil prices and higher yields have weighed on gold.
Brent crude futures were last steady at $90.87 a barrel, having hit an 11-month high of $97.69 last week.
Spot gold touched a seven-month low of $1,814 an ounce on Tuesday and was last at $1,819.
Key figures
Tokyo – Nikkei 225 < DOWN 2.28% at 30,526.88 (close)
Hong Kong – Hang Seng Index < DOWN 0.78% at 17,195.84 (close)
Shanghai – Composite <> CLOSED
London – FTSE 100 > UP 0.11% at 7,478.40 (0933 BST)
New York – Dow < DOWN 1.29% at 33,002.38 (Monday close)
- Reuters with additional editing by Sean O’Meara
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