Asian stocks decline as US treasury yields climb
Equities in Japan, Hong Kong and China were lower after US stocks halted a four-day rally with the steepest slide in almost two weeks.
Most stocks in Asia followed their American counterparts lower as geopolitical developments and rising benchmark U.S. yields spurred a return of risk aversion.
Equities in Japan, Hong Kong and China were lower after U.S. stocks halted a four-day rally with the steepest slide in almost two weeks. Australian shares bucked the trend while Korean shares fluctuated. Earlier, yields on 10-year Treasury notes rose to 3.07%, the highest since 2011, after upbeat U.S. retail sales data fueled bets the Federal Reserve may raise interest rates three more times this year. Bloomberg’s dollar index steadied close to 2018 high.
In emerging markets, equities dropped the most since March and currencies slumped the most in a year.
Risk aversion spread across asset classes as investors — already uncomfortable with rising yields and a strong dollar — grappled with trade, growth, and geopolitical worries. Fresh uncertainty about the U.S.-North Korea summit, violence in the Middle East, the U.S.-China trade spat, and global growth concerns are fueling negative sentiment.
“Risk premiums are still awfully compressed,” Jeffrey Johnson, head of Asia-Pacific fixed income, Vanguard Investments Australia, said at the Bloomberg Invest summit in Sydney. “We look at valuations, particularly on asset classes like equities, they are at fairly high levels still.”
Elsewhere, established safe-haven assets failed to ignite, despite the gloomy sentiment. Gold steadied below $1,300 an ounce for the first time since December and the yen maintained declines. The Australian dollar fell after wages grew less than expected in the first quarter.