Asian stocks and bonds fell on Thursday, mirroring declines in U.S. markets, after another weak sell-off in Treasury bonds heightened concerns about the impact of rising yields.
Stocks in Australia and South Korea fell, while Japan was down more than 1% at the open. U.S. stock futures were lower in early Asian trading after the S&P 500 ended below 5,300 yesterday, while the Nasdaq 100 had its worst day since May 1.
U.S. Treasuries were steady after tepid demand for a $44 billion sale of seven-year notes added to concerns that financing the U.S. deficit will push yields higher at a time when the Federal Reserve is in no rush to cut interest rates. Australian and New Zealand debt followed suit early in the day.
“Asian stock markets are set to start the day lower after declines on Wall Street and as turmoil in global bond markets deepens, dampening risk appetite,” said Tony Sycamore, market analyst at IG Australia in Sydney.
Dollar position
Rising Treasury yields have pushed the dollar higher, weighing on the Japanese and Chinese currencies this week. The dollar strength index steadied today after jumping to a two-week high in the previous session.
The yen fell as much as 0.3% to above 157.50 per dollar on Wednesday, amid suspicions that the Japanese government intervened to spark a rapid rise in the currency in late trade. The yuan fell to its lowest since November, as the People’s Bank of China allowed it to weaken against the flexible dollar through a weaker daily reference rate.
Emerging Asian currencies, including the South Korean won and Malaysian ringgit, continued to weaken. Elsewhere, South Africa’s rand fell 0.4% against the dollar today as the country heads to the polls to elect its next parliament.
In commodities, oil steadied after falling yesterday, as broader risk-off sentiment offset rising tensions in the Middle East ahead of an OPEC+ supply meeting next Sunday.
