A currency trader speaks on the phone while monitoring exchange rates in a trading room at KEB Hana Bank in Seoul on March 9, 2020.
JUNG YEON-JE | AFP via Getty Images
SINGAPORE – Asia-Pacific markets fell on Friday as investor sentiment turned cautiously amid new concerns about inflation expectations.
Australian stocks plummeted after market opening, with the benchmark ASX 200 falling 0.58% – the index rebounded some of its previous losses of more than 1%. Most sectors fell: the energy and basic sectors fell 2.32% and 1.07% respectively, while the heavily weighted financial sub-index lost about 0.1%.
The Nikkei 225 in Japan fell 0.6%, while the Topix index fell 0.32%.
South Korea’s Kospi fell 0.84% and Kosdaq 0.62% as tech names were sold. Shares of Samsung Electronics fell 0.84%, SK Hynix fell 2.11% and LG Electronics lost 1.29%.
The Wall Street stock market struggled overnight, where tech stocks were hit hard while the Dow and S&P 500 also fell. That weakness in equities was reflected by an increase in bond yields.
Revenues move in the opposite direction of prices. Rising bond yields typically indicate confidence in the economic recovery and fears of inflation, which may make fast-growing stocks appear less attractive to investors.
“It was an overnight mixed session for risky assets as bond yields picked up in the wake of the FOMC meeting,” ANZ Research analysts wrote in a note Friday morning. “The Fed will wait for evidence of stronger data before raising the forecasts of their fed funds. This pushed up market measures on inflation expectations, pushing bond yields higher.”
Currencies and oil
In the foreign exchange market, the dollar was trading almost flat at 91,853 against a basket of its peers. Overnight, the dollar cleared most of its losses following the Fed’s decision on Wednesday.
“The Federal Reserve has no plans to raise interest rates until 2023, but the dollar’s recovery and the rise in government bond yields tell us investors are still attracted to the positive outlook of the economy,” said Kathy Lien. , director of currency strategy at BK Asset Management said in a note on Thursday.
Lien explained that the Fed will not be able to keep the US dollar low “because the introduction of vaccines and stimulus controls will bring a strong recovery in the second quarter and second half.”
The Japanese yen changed hands at 109.02 per dollar, weakening from an earlier level around 108.87. The Bank of Japan will conclude its two-day monetary policy meeting on Friday, and reports suggested the central bank is expected to broaden a bandwidth that allows long-term interest rates to move around the 0% target.
The Australian dollar fell 0.17% to $ 0.7743.
The oil price fell during trading hours in Asia on Friday. US crude oil fell 0.55% to $ 59.67 a barrel, while the global benchmark Brent fell 0.51% to $ 62.96.
Overnight, prices plunged nearly 7% or more for both US crude oil and Brent futures.
“Crude oil prices collapsed as concerns about weaker short-term demand intensified,” ANZ analysts wrote. “Following recent updates from IEA, EIA and OPEC, oil demand growth appears to remain well below previously optimistic forecasts. This comes amid mixed economic data.”
The stronger US dollar probably also weighed on investor interest in the sector.