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Asian markets retreated in early trading Friday, after Wall Street ended lower as bond yields continued to surge.
Japan’s Nikki 225
NIK,
slid 0.9%, while Hong Kong’s Hang Seng index
HSI,
fell 1.5%. The Shanghai Composite
SHCOMP,
dropped 1%, while the smaller-cap Shenzhen Composite
399106,
declined 1% as well. South Korea’s Kospi
180721,
was down 0.9%, and Australia’s S&P/ASX 200
XJO,
declined 0.4%. Stocks in Taiwan
Y9999,
were slightly positive, while benchmark indexes in Singapore
STI,
and Indonesia
JAKIDX,
fell.
Chip-maker stocks fell across the region, with Samsung Electronics
005930,
SK Hynix
000660,
and Taiwan Semiconductor
2330,
dropping.
On Wall Street, stocks finished sharply lower Thursday as another jump in U.S. Treasury yields reflected expectations for faster economic recovery and inflation. The Dow Jones Industrial Average
DJIA,
fell 153.07 points, or 0.5%, to end at 32,862.30, after trading at an intraday record in earlier activity, The S&P 500
SPX,
was down 58.66 points, or 1.5%, to finish at 3,915.46 and The Nasdaq Composite
COMP,
slumped 409.03 points, or 3%, to close at 13,116.17.
Long-term U.S. bond yields have risen in the past six weeks as economic data has improved and the $1.9 trillion fiscal stimulus bill combined with the Fed’s easy-money policy has raised the specter of inflation. On Thursday the yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to its highest level in more than a year.
“There is a palatable fear brewing that the Federal Reserve’s monetary policy will spur on inflation to a level that will ultimately force their hands sooner than later,” Stephen Innes, chief global markets strategist at Axi, wrote in a note. “Indeed this is adding to the high degree of inflation uncertainty which is the biggest tail risk the market is now dealing with.”
Meanwhile, U.S. and Chinese officials met in Alaska, but opening remarks were decidedly pointed and contentious. The world’s two largest economic powers remain at odds over a number of key issues, including trade and human rights.
After sinking 7% Thursday — its worst day since September — benchmark U.S. crude
CLJ21,
inched higher to $60.06 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude
BRNK21,
the international standard, advanced to 63.33 per barrel in London after slumping 7% Thursday, its largest daily percentage loss since last June.
The dollar
USDJPY,
edged up to 109.11 yen.
