Stock Selloff Hits Asia as Bond Yields Climb: Markets Wrap




  • In Business
  • 2021-03-04 00:20:03Z
  • By Bloomberg
 

(Bloomberg) -- Asian stocks fell with U.S. futures Thursday after an overnight surge in bond yields once more dragged down shares on Wall Street. The dollar strengthened and benchmark Treasury yields ticked higher.

Stocks dropped in Japan, South Korea and Australia, while S&P 500 futures saw modest declines. Earlier, the Nasdaq 100 slumped to a two-month low and the S&P 500 extended its slide into a second day. A selloff in high-flying giants such as Apple Inc. and Amazon.com Inc. outweighed gains in banks and energy producers.

Australian bonds slumped after benchmark Treasury yields approached 1.5% on Thursday, and a market gauge of inflation expectations over the next five years hit its highest level since 2008. Traders also assessed data pointing to a slow and uneven economic recovery from the depths of the pandemic. Oil extended losses.

The selloff in Treasuries has rattled nerves across the globe amid warnings of excessive investor optimism in stocks. Policy makers still appear reluctant to step in to buy more longer-dated bonds, with focus turning to Federal Reserve Chairman Jerome Powell's upcoming comments. Chicago Fed President Charles Evans said Wednesday he shared the view that the recent rise in yields was healthy.

"Inflation is a concern; there is a lot of money sloshing around the system and it makes sense to have some sort of a correction right now," said Shana Sissel, Spotlight Asset Group chief investment officer. "And bond yields going up is the market's implicit way of tightening since the Fed has made it clear they don't have the intention of doing so."

Data Wednesday showed that growth at U.S. service providers slowed to a nine-month low in February. Meanwhile, the number of employees at U.S. businesses rose by less than expected, underscoring the jobs market's struggle to recover despite a decline in Covid-19 infections in recent weeks.

The U.S. economy expanded modestly in the first two months of the year and sentiment among business owners is picking up as vaccinations bolster the prospects for growth, according to the Federal Reserve's Beige Book. Democratic leaders in the Senate are working to consolidate support for the $1.9 trillion stimulus bill.

Elsewhere, oil retreated on a government report showing a record drop in domestic fuel inventories following a deep freeze that shuttered refineries in the U.S. South.

Some key events to watch this week:

OPEC+ meeting on output Thursday.U.S. factory orders, initial jobless claims and durable goods orders are due Thursday.The February U.S. employment report on Friday will provide an update on the speed and direction of the nation's labor market recovery.

These are some of the moves in markets:

Stocks

S&P 500 futures fell 0.4% as of 9:07 a.m. in Tokyo. The S&P 500 fell 1.3%. The Nasdaq 100 lost 2.9%.Topix index fell 0.7%.Australia's S&P/ASX 200 Index fell 1.2%.Kospi index fell 1.3%.Hang Seng Index futures fell 0.9% earlier.

Currencies

The yen traded at 107.03 per dollar.The offshore yuan was at 6.4781 per dollar.The Bloomberg Dollar Spot Index gained 0.1%.The euro traded at $1.2056, down 0.1%.

Bonds

The yield on 10-year Treasuries was steady at 1.49% after rising nine basis points.Australia's 10-year bond yield rose 10 basis points to 1.77%.

Commodities

West Texas Intermediate crude fell 0.8% to $60.79 a barrel.Gold was at $1,711.40 an ounce after sliding.

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