* MSCI Asia Pacific ex Japan 0.79% lower
* Shenzhen CSI 300 in China 0.9% lower
* Dollar appreciates against euro, yen as US returns race ahead
* Nasdaq is down 2.4% confirming correction
SYDNEY / NEW YORK, March 9 (Reuters) – Asian stocks were lower Tuesday as rising bond yields impacted tech stocks and corporate valuations in China and Korea and investors grappled with inflation fears as the United States appears to be a $ 1.9 trillion stimulus package to endure.
MSCI’s widest index of Asia-Pacific stocks outside Japan was down 0.79%, while the Korean Kospi was down 1.88%, the fourth consecutive session of losses. Japan’s Nikkei managed to cut previous losses in the session to 0.24% higher.
US Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s aid package for coronavirus would provide enough resources to fuel a “very strong” economic recovery in the US, noting that “there are tools” to cope with inflation.
Despite the positive signs, investors remain in conflict over whether the stimulus will help global growth recover faster from the downturn of COVID-19 or cause the world’s largest economy to overheat and lead to runaway inflation .
“The likelihood of seeing more inflation in the economy is greatly increased by the monetary and fiscal policies that we see around the world,” Goldman Sachs Chief Executive Officer David Solomon told a webcast at a conference in Sydney.
“There is certainly a reasonable result where inflation is accelerating faster than people expect, and that will clearly have an impact on the markets and volatility.”
The technology sector and other richly valued companies are very sensitive to the rising rates.
Australian stocks tracked gains on Wall Street overnight, with the main S & P / ASX 200 index up a whopping 1.04% on Tuesday. However, Australian technology stocks fell for the sixth consecutive session, in line with their US counterparts.
The index returned that gain to be only 0.40% higher in afternoon trading due to the technical declines and a 10% decline in Insurance Australia Group shares ahead of an announcement on the insolvency of financial services company Greensill Capital .
China’s blue chips were down 1%, while Hong Kong’s Hang Seng was up 0.9%.
On Wall Street, the Dow rose while the Nasdaq lost more than 2%, marking a decline of more than 10% since the February 12th high and confirming a correction in the index’s value.
The Dow Jones Industrial Average rose 0.97%, the S&P 500 lost 0.54% and the Nasdaq Composite fell 2.41%.
The pan-European STOXX 600 index .STOXX rose 2.10% and the MSCI index of stocks around the world fell 0.02%.
“If interest rates get higher because people get bullish about what economic growth looks like, it’s still good for stock prices,” said Tom Hainlin, global investment strategist at US Bank Wealth Management’s Ascent Private Wealth Group in Minneapolis.
US Treasury yields rose as investors continued to price higher inflation and more optimistic outlook for the US economy as it emerges from the coronavirus pandemic.
The 10-year benchmark return rose to 1.6029%, from 1.594% late Monday.
In the currency markets, the dollar index reached its three-and-a-half-month high, rising 0.523%, while the euro rose 0.06% to $ 1,185.
Oil prices were higher on Tuesday, but failed to make up for gains on Monday after attacks on oil facilities in Saudi Arabia pushed prices up to the highest since the COVID-19 pandemic began.
Brent crude oil futures were up 33 cents, or 0.51%, to $ 68.57 a barrel. US crude oil futures were 27 cents, or 0.42% higher at $ 65.32.
Spot gold added 0.4% to $ 1,688.42 an ounce.
Reporting by Paulina Duran and Matt Scuffham; Edited by Sam Holmes and Christian Schmollingr