(ATF) Hong Kong: Asian markets were broadly lower as investors remain concerned by rising US Treasury yields and as factory-price data from China triggered fresh worries over global inflation.
Japanese stocks outperformed amid growing expectations ahead of the earnings season that companies will report healthy profits and issue upbeat forecasts.
Japan’s Nikkei 225 index edged up 0.20%, Australia’s S&P ASX 200 ended flat but Hong Kong’s Hang Seng index slipped 1.07% and China’s CSI300 eased 1.50%, weighed down additionally by Washington’s latest move to put China’s top supercomputing centres on a trade blacklist. Regionally, the MSCI Asia Pacific index dipped 0.10%.
The region was spooked by the sustained rise in the US Treasury yields with the 10-year benchmark now at 1.67%, 4 basis points higher than Thursday.
“Economies with current account deficits, namely India, Indonesia and the Philippines, are those with the most obvious supply-side shortages. With lower domestic savings, these economies are more reliant on foreign capital for financing needs,” said Alicia Garcia Herrero, Natixis’s Chief Economist, Asia Pacific.
“These obviously make them more vulnerable to capital outflows when yields increase globally.”
Fed assurances
This came despite Federal Reserve Chair Jerome Powell’s assurances that the priority of monetary policy was to support the recovery from the pandemic and not to worry about the coming temporary rise in inflation.
Inflation fears remains elevated after China reported factory gate prices rose by most in nearly 3 years as economic recovery quickens.
“As the world’s largest exporter of manufactured goods, higher PPI inflation in China will be inevitably passed to other economies, including the US,” said Ting Lu, Nomura’s Chief China Economist.
“We expect CPI and PPI inflation to rise further to around 1.2% y-o-y and 5.5%, respectively, in April on another month of low bases, rising services prices and increasing energy and commodity prices. We expect PPI inflation to rise to around 6.0% y-o-y in mid-year and then moderate thereafter, amid potential support from the ongoing environmental campaign. CPI inflation could rise throughout the year to around 2.8% at end-2021.”
China’s markets were under additional pressure as the US decision to blacklist some supercomputing centres was seen as another move towards isolating Beijing.
“The Department of Commerce will use the full extent of its authorities to prevent China from leveraging U.S. technologies to support these destabilizing military modernization efforts,” said U.S. Secretary of Commerce Gina M. Raimondo in a statement.
The US dollar strengthened, rising 0.3% against a basket of currencies to 92.30 while gold added 0.4% to $1,744 per ounce as inflation fears swirled.
Also on Asia Times Financial
- China factory gate price jump raises global inflation concern
- US restricts trade with Chinese supercomputer centres
- HK challenge over SOE default may impact foreign bond purchases
Asia Stocks
- Japan’s Nikkei 225 index edged up 0.20%
- Australia’s S&P ASX 200 ended flat
- Hong Kong’s Hang Seng index slipped 1.07%
- China’s CSI300 eased 1.50%
- The MSCI Asia Pacific index dipped 0.10%.
Stock of the day
Toshiba Corporation shares fell as much as 6.1% after its chairman said a recent $20 billion offer by CVC Capital Partners to take the company private was contingent on various regulatory approvals and financing arrangements. “We expect that such financing process would require a substantial amount of time and involve complexity for consideration,” said board chairman Osamu Nagayama in a statement, suggesting a delay.
