Asian Shares Decline On Interest Rate Worries

Asian stocks retreated on Tuesday, as the dollar reached its peak for the year and the 10-year U.S. Treasury yield topped 4.5 percent amid bets that borrowing costs in the U.S. and Europe will remain higher for longer.

Fresh signs of stress in China’s property sector and worries about a possible U.S. government shutdown also kept investors nervous.

Chinese markets closed lower as investors awaited industrial profit, manufacturing and services PMI data due later in the week for direction.

China’s Shanghai Composite Index dropped 0.4 percent to 3,102.27 ahead of the week-long National Day holiday beginning on Friday.

Hong Kong’s Hang Seng Index tumbled 1.5 percent to 17,466.90 on lingering economic and geopolitical worries.

U.S. President Joe Biden’s administration on Monday imposed new trade restrictions on 11 Chinese and five Russian companies for allegedly supplying a blacklisted Russian firm with parts to make drones for Russia’s war effort in Ukraine.

Japanese markets fell sharply as rising U.S. Treasury yields pulled down chip-related shares. The Nikkei 225 Index slumped 1.1 percent to 32,315.05, while the broader Topix Index settled 0.6 percent lower at 2,371.94.

Advantest, Tokyo Electron and Screen Holdings plunged 2-4 percent as U.S. Treasury yields hit their highest level since October 2007 amid the possibility of a prolonged high interest-rate environment.

Japan Exchange Group rallied 2.4 percent after the operator of the Tokyo Stock Exchange raised its annual net profit forecast.

Seoul stocks hit a five-month low as developments at Chinese developers China Evergrande Group and China Oceanwide Holdings dampened hopes for an economic recovery in the world’s second largest economy.

The Kospi ended down 1.3 percent at 2,462.97 – extending losses to a fourth straight session. Samsung Electronics, POSCO Holdings, SK Hynix and Samsung Biologics lost 1-2 percent.

Australian markets ended lower as weak commodity prices due to a stronger dollar weighed on gold and mining stocks.

The benchmark S&P/ASX 200 Index slid 0.5 percent to 7,038.20 ahead of August inflation sales data due on Wednesday. The broader All Ordinaries Index settled 0.5 percent lower at 7,242.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index closed down 0.3 percent at 11,342.87.

U.S. stocks rebounded overnight as investors looked for bargains following last week’s sell-off on concerns that interest rates will remain higher for longer.

Meanwhile, investors shrugged off Moody’s warning that a U.S. government shutdown would have negative implications for the country’s top tier credit rating.

The tech-heavy Nasdaq Composite rose half a percent, while the S&P 500 gained 0.4 percent and the Dow edged up 0.1 percent.