BANGKOK – Shares fell in Asia on Wednesday as investors weighed the possibility that inflation could prompt central banks to adjust their ultra-low interest rate policies.
Hang Seng HSI in Hong Kong,
led the decline and lost 2%. Tokyo’s Nikkei 225 NIK,
0.9% shed and in Seoul the Kospi 180721,
slant 0.9% lower. Australian S & P / ASX 200 XJO,
lost 1%, while the Shanghai Composite index SHCOMP,
gave 1.5%. Shares won in Singapore STI,
but slipped in Taiwan Y9999,
and Indonesia JAKIDX,
Investors remain increasingly focused on a large increase in bond yields and how this affects stock valuations.
The sheer amount of stimulus being pumped into economies has been a factor in boosting bond yields, causing some investors to pause for a moment to revive concerns about inflation that had been almost non-existent for over a decade.
The yield on the 10-year Treasury bill, which recently rose, was stable at 1.34% on Wednesday.
When bond yields rise, stock prices tend to be negatively impacted as investors spend an increasing proportion of their money on the steady stream of income that bonds provide.
Federal Reserve Chairman Jay Powell told Congress on Tuesday that the Fed saw no need to change its policy of keeping interest rates ultra-low, noting that the economic recovery remains “uneven and far from complete.”
The message seemed to have been muted in Asia.
“Rising borrowing costs remain the most common problem, although Fed Powell’s moderate comments helped halt US stocks’ decline on Tuesday,” IG’s Jingyi Pan said in a comment.
However, “Despite reassuring comments about lower interest rates from Jerome Powell, chairman of the US Federal Reserve, Asian markets continued to seek concern about rising bond yields,” said Pan.
A burst of late-afternoon purchases on Wall Street on Tuesday helped reverse most of a tech-focused sell-off, boosting the S&P 500 SPX.
until his first win after a five-day loss streak.
The benchmark index posted a gain of 0.1% to 3,881.37. The Dow Jones Industrial Average DJIA,
also increased 0.1% to 31,537.35. The Nasdaq COMP,
0.5% lost to 13,465.20. The indexes were at record highs less than two weeks ago.
In other trade, US benchmark crude oil CLJ21,
lost 52 cents to $ 61.15 a barrel in electronic commerce on the New York Mercantile Exchange. It lost 3 cents to $ 61.67 a barrel on Tuesday. Brent raw BRNJ21,
the international standard lost 39 cents to $ 64.09 a barrel.
The US dollar USDJPY,
rose to 105.44 Japanese yen from 105.24 yen at the end of Tuesday.