Stocks in Asia-Pacific fell sharply in Friday trade following an overnight drop on Wall Street as a rapid rise in bond yields rattled investor sentiment.
Hong Kong’s Hang Seng index plunged 2.78% in morning trade. Mainland Chinese stocks also fell: The Shanghai`composite was down 1.93% while the Shenzhen component slipped 2.717%.
In Japan, the Nikkei 225 fell 2.53% while the Topix index slipped 2.03%. South Korea’s Kospi dropped 2.67%. Earlier, the Nikkei 225 and the Kospi both fell around 3% each.
Australia’s S&P/ASX 200 also saw sizable losses as it fell 2.27%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 2.42% lower.
Bond yields watched
Investors monitored bond yields during Friday’s session. Overnight, the yield on the benchmark 10-year U.S. Treasury note briefly crossed the 1.6% level to trade at its highest level in more than a year.
“Yields are rising because investors are optimistic. They believe a strong sustainable recovery is right around the corner and prices will rise as demand comes roaring back.,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a note dated Thursday.
Investor optimism about the economic outlook has risen recently on the back of factors such as positive vaccine developments as multiple major economies inoculate their populations.
“In this type of environment, bond yields should be higher regardless of whether the Fed raises interest rates,” Lien said.
U.S. bond yields eased in the morning of Asia trading hours on Friday. The yield on the 10-year was last at 1.4888%, while the yield on the 30-year Treasury bond sat at 2.2673%. Yields move inversely to prices.
In Asia-Pacific, the yield on the Australia 10-year bond rose to 1.861% The yield on the 10-year Japanese government bond also advanced to 0.166%.
| TICKER | COMPANY | NAME | PRICE | CHANGE | %CHANGE |
|---|---|---|---|---|---|
| .N225 | Nikkei 225 Index | NIKKEI | 29246.40 | -921.87 | -3.06 |
| .HSI | Hang Seng Index | HSI | 29342.49 | -731.68 | -2.43 |
| .AXJO | S&P/ASX 200 | ASX 200 | 6697.70 | -136.30 | -1.99 |
| .SSEC | Shanghai | SHANGHAI | 3519.09 | -65.95 | -1.84 |
| .KS11 | KOSPI Index | KOSPI | 2998.64 | -101.05 | -3.26 |
| .FTFCNBCA | CNBC 100 ASIA IDX | CNBC 100 | 11358.24 | -324.91 | -2.78 |
Tech stocks drop
Investors also kept an eye on technology stocks in Asia-Pacific.
Hong Kong-listed shares of Chinese tech firms plummeted in early trading: Tencent slipped 3.04%, Xiaomi fell 4.28%, Alibaba dropped 4.68% and Meituan declined 5.83%. The broader Hang Seng Tech index in the city also fell more than 5%.
Japanese conglomerate SoftBank Group saw its shares plunge 3.14%. In South Korea, shares of industry heavyweight Samsung Electronics fell 3.52%.
Those losses came after the tech-heavy Nasdaq Composite dropped 3.52% overnight on Wall Street to close at 13,119.43 — its biggest sell-off since Oct. 28.
The Dow Jones Industrial Average also fell 559.85 points to finish its trading day at 31,402.01 while the S&P 500 declined 2.45% to close at 3,829.34.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.365 after it rose earlier from below the 90 level.
The Japanese yen traded at 106.27 per dollar, having weakened from levels below 105.6 against the greenback seen earlier this week. The Australian dollar changed hands at $0.785, off levels above $0.792 seen earlier in the week.
Oil prices were lower in the morning of Asia trading hours, with international benchmark Brent crude futures down 0.75% to $66.38 per barrel. U.S. crude futures fell about 1% to $62.85 per barrel.
