(ATF) Hong Kong: Inflation fears continued to ravage investor sentiment as Asian markets retreated following the surge U.S. consumer prices, which jumped by the most in almost 12 years last month.
The increase was largely due to outsized increases in airfares, used cars and lodging costs, which were all driven by the pandemic and likely transitory. But the magnitude of the rise pushed up yields which continued to hover at elevated levels.
US 10-year Treasury yields were a basis point higher at 1.70% in Asian trading after rising 7 basis points overnight.
“Both the headline and core inflation for April came in much stronger than expected. This reflects the low base effect from a year ago, especially in energy prices,” said Tai Hui, Chief Asia Market Strategist, J.P. Morgan Asset Management.
“While analysts and the Federal Reserve could dismiss this as an one-off event, due to reduced supply of new cars, there could be other one-off factors turning up as the economy recovers,” he said.
Musk effect
Japan’s Nikkei 225 index dived 2.49%, Australia’s S&P ASX 200 slid 0.88%, Hong Kong’s Hang Seng index tumbled 1.81%, and China’s CSI300 retreated 1.02%. Regionally, the MSCI Asia Pacific index fell 1.66%.
Bitcoin slumped after Tesla Inc. suspended purchases using the cryptocurrency with CEO Elon Musk citing concerns about the use of fossil fuel for bitcoin mining. The crytocurrency was down 13% at around $49,480.
But analysts are perplexed by his U-turn after Musk had announced just a few months ago to much fanfare, that his company Tesla had bought $1.5 billion worth of Bitcoin.
“”Musk likes being known as being a contrarian. He likes to go against the crowd in a high-profile way. Is his waning interest in Bitcoin at a time when huge amounts of institutional investment from major Wall Street banks is pouring in, part of this?,” said Nigel Green, deVere Group’s chief executive.
“Why is he not using this influence to further advance and incentivise renewable energy for cryptocurrencies – something that Twitter founder Jack Dorsey has previously tweeted about and with which Musk agreed on the social platform.”
Oil prices slipped after the operator of the biggest fuel pipeline in the US, Colonial Pipeline, announced it would resume operations. West Texas Intermediate crude declined 1.5% to $65.06 a barrel and Brent crude declined 1.5% to $68.29 a barrel.
Also on Asia Times Financial
- Inflation shock hits stocks, ARK founder unconcerned
- Tesla cancels plan to accept bitcoin for vehicle purchases
- More rating agencies downgrade India GDP amid Covid crisis
- Toyota profits jump 10% despite chip shortage and pandemic
- Think-tank blasts HSBC over coal investments
- US lawmakers focus on boosting rare earths production
Asia Stocks
- Japan’s Nikkei 225 index dived 2.49%
- Australia’s S&P ASX 200 slid 0.88%
- Hong Kong’s Hang Seng index tumbled 1.81%
- China’s CSI300 retreated 1.02%
- The MSCI Asia Pacific index fell 1.66%
Stock of the Day
China Evergrande New Vehicle shares fell as much as 14.8% after its parent China Evergrande sold a 2.66% stake at HK$40.92 per share, representing a discount of 20%.
“The placing of 260 million shares serves to reduce the shareholding ratio of the top 20 shareholders of Evergrande Vehicle to below 90%, fulfilling the necessary conditions for Evergrande Vehicle to participate in the Hong Kong Stock Connect in the next step,” China Evergrande said in a statement.
Participating in Hong Kong Stock Connect would allow Chinese onshore investors to purchase Evergrande NEV shares.
