Asian Shares Tumble As Bond Yields Rebound

Asian stocks saw notable weakness on Thursday as rising yields on U.S. Treasury bonds fanned worries about inflation and the economic outlook.

Investors awaited U.S. Federal Reserve Chairman Jerome Powell’s speech at a Wall Street Journal conference later today, where he may address concerns about the risk of a rapid rise in long-term borrowing costs.

Chinese stocks fell the most in over seven months on concerns over high valuations. The benchmark Shanghai Composite Index tumbled 73.41 points, or 2.1 percent, to 3,503.49, while Hong Kong’s Hang Seng Index plunged 643.63 points, or 2.2 percent, to 29,236.79.

Japanese shares hit one-month low amid increased uncertainty across the equity and bond markets. The Nikkei 225 Index slumped 628.99 points, or 2.1 percent, to close at 28,930.11, the lowest since February 5th. The broader Topix ended 1 percent lower at 1,884.74.

Heavyweights including SoftBank Group and Fast Retailing plunged 5.2 percent and 5.5 percent, respectively. Screen Holdings, Tokyo Electron and Advantest declined 2-3 percent in the tech sector.

Hitachi Zosen soared 19.5 percent on reports that the energy and infrastructure company had developed a high-performance solid-state battery.

Australian stocks followed Wall Street lower to snap a three-day winning streak. The benchmark S&P/ASX 200 Index dropped 57.30 points, or 0.8 percent, to 6,760.70 amid across-the-board selling. The broader All Ordinaries Index ended down 67.30 points, or 1 percent, at 7,000.60.

Healthcare stocks succumbed to selling pressure, with heavyweight CSL losing 4.2 percent. Losses on the tech-heavy Nasdaq pulled down local peers, with Afterpay and Appen declining 2-3 percent.

Mining heavyweights BHP and Rio Tinto fell 3.1 percent and 6.2 percent, respectively, while gold miners Evolution and Newcrest gave up 3-4 percent after gold prices touched a nine-month low overnight.

The total value of retail sales in Australia rose 0.5 percent sequentially in January, a government report showed, while the trade balance of goods and services hit a record $10.1 billion in the month after a surge in exports of iron ore and coal.

Seoul stocks snapped a two-day winning streak amid increased concerns over climbing U.S. Treasury yields, which is seen as a sign of an economic recovery and a precursor of inflation.

The Kospi dropped 39.50 points, or 1.3 percent, to 3,043.49 amid massive selling by foreign investors. Chip giants Samsung Electronics and SK Hynix gave up 1.9 percent and 3.4 percent, respectively.

South Korea’s gross domestic product expanded a seasonally adjusted 1.2 percent sequentially in the fourth quarter of 2020, the Bank of Korea said in a final reading. That beat forecasts for an increase of 1.1 percent following the 2.1 percent gain in the previous three months.

On a yearly basis, GDP was down 1.2 percent – again exceeding expectations for a decline of 1.4 percent following the 1.1 percent drop in the three months prior.

New Zealand shares joined the global selloff, with the benchmark NZX-50 Index ending down 134.76 points, or 1.1 percent, at 12,224.50. Synlait Milk shares plunged 10.1 percent after the diary firm withdrew its full-year 2021 guidance, citing significant uncertainty and volatility within its business.

U.S. stocks ended lower overnight as the bond market sell-off gained pace amid positive news on the vaccine front, with President Biden announcing the U.S. will have enough vaccine supply for every adult in America by the end of May.

Investors also reacted to weak private sector employment and service sector activity data. The tech-heavy Nasdaq Composite tumbled 2.7 percent to its lowest closing level in nearly two months, while the S&P 500 lost 1.3 percent and the Dow Jones Industrial Average eased 0.4 percent.

Market Analysis