SINGAPORE – Asia Pacific stocks fell sharply on Friday after falling on Wall Street overnight as a rapid surge in bond yields rocked investor sentiment.
In Japan, the Nikkei 225 took losses in major markets in the region as it fell 3.99% to close at 28,966.01 while the Topix index fell 3.21% to end its trading day at 1,864.49. South Korea’s Kospi fell 2.8% to close at 3,012.95.
The Hang Seng Index in Hong Kong fell 3.42% on the last hour of trading. Mainland China stocks also fell on the day: the Shanghai Composite fell 2.12% to 3,509.08 while the Shenzhen Component fell 2.167% to around 14,507.45.
The Australian S & P / ASX 200 also posted significant losses as it fell 2.35% to close at 6,673.30.
The broadest MSCI index for stocks in the Asia-Pacific region outside Japan fell 3.26%.
Bond yields are rising
Investors monitored bond yields during Friday’s session. Overnight, the yield on the 10-year US Treasury bill briefly crossed 1.6% to trade at its highest level in more than a year.
“Yields are rising because investors are bullish. They believe that a strong sustained recovery is imminent and prices will rise when demand picks up again,” wrote Kathy Lien, chief executive of FX strategy at BK Asset Management, in a note dated Thursday.
Investor optimism about the economic outlook has increased recently, driven by factors such as positive vaccine developments as several large economies vaccinate their populations.
Destination Wealth Management founder and CEO Michael Yoshikami said he was “not terribly surprised” that 10-year government bond yields hit 1.5% to 1.6%.
“I think if you start to get over two, two and a half, okay, then we’re starting to get worried. But honestly, I don’t see inflationary pressures in the economy right now, even if the stimulus package comes.” “Yoshikami told CNBC” Squawk Box Asia “on Friday.
US bond yields fell in the afternoon of Friday afternoon trading hours in Asia. The yield on the 10-year government bond was most recently 1.5012%, while the yield on the 30-year government bond was 2.2873%. The returns move inversely to the prices.
In the Asia-Pacific region, the Australian 10-year bond yield rose to 1.883%. In contrast, the yield on the 10-year Japanese government bond fell to 0.158%. Previously, the return on the 10-year JGB had risen to 0.181% – a level that, according to FactSet, has not been reached since the beginning of 2016.
Tech stocks are falling
Investors also watched Asia Pacific technology stocks fall in trading on Friday.
Hong Kong-listed stocks of Chinese tech companies plummeted in afternoon trading: Tencent fell 3.18%, Xiaomi fell 5.4%, Alibaba fell 4.52% and Meituan fell 7.07%. The broader Hang Seng Tech Index in the city also fell 5.6%.
The Japanese conglomerate SoftBank Group posted a price decline of 4.53%. In South Korea, the shares of the industry heavyweight Samsung Electronics fell 3.28%.
Those losses came after the tech-heavy Nasdaq Composite fell 3.52% overnight on Wall Street to close at 13,119.43 – its biggest sell-off since October 28.
The Dow Jones Industrial Average also fell 559.85 points to end its trading day at 31,402.01 while the S&P 500 fell 2.45% to close at 3,829.34.
Currencies and oil
The U.S. dollar index, which tracks the greenback versus a basket of its peers, hit 90.464 after rising below 90 earlier in the week.
The Japanese yen was trading at 106.09 per dollar after weakening against the greenback from below 105.6 earlier this week. The Australian dollar changed hands at $ 0.7817, below the over $ 0.792 level it saw earlier in the week.
Oil prices were lower in Asia during the afternoon session. The international benchmark’s Brent crude oil futures fell 1.14% to $ 66.12 a barrel. The US crude oil futures fell 1.16% to $ 62.79 a barrel.
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