Global Rate Concerns Trigger Decline in Asian Stock Market
In today’s trading session, Asian stocks showed low performance, and bonds declined amid expectations that global interest rates will remain high for an extended period.
Investors are now turning their attention to key inflation data at the week’s end for further insights into the future trajectory of monetary policy.
Tokyo’s Nikkei 225 index fell 1.3% to 38,054.13. During the midday trading, Nikkei was down 1.51% at 37,974.47 after declining as much as 2.4% in early trading.
The 10-year Japanese government bond (JGB) yield reached 1.1% in the Asian morning, its highest level since July 2011, as investors anticipated another rate hike in Japan as early as July and remained cautious about the central bank tapering its bond purchases.
Though JGB yields are still low compared to their US counterparts, their rise to a decade-high has significantly impacted market sentiment, said Hiroshi Namioka, chief strategist at T&D Asset Management.
“It’s a bit of a psychological shock for market players who haven’t seen yields rise like this until now, or rather, who have become numb as easy monetary policy continued for such a long time.
Hong Kong’s Hang Seng index dropped by 1.4% to 18,217.83.
The Shanghai Composite index also slipped by 0.6% to 3,091.68, while South Korea’s Kospi decreased by 1.6% to 2,635.44.
Taiwan’s Taiex fell 1.4%, and India’s Sensex was down 0.5%
In a commentary stated by Mizuho Bank, a hotter and more persistent global inflation is deflating asset markets. This means that the ‘Goldilocks’ season is unraveling, and there are growing concerns about the negative impact on demand from higher rates.
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