Asian stocks sink, Wall Street rises

BEIJING (AP) — Asian stock markets declined yesterday after Wall Street rose as a wave of investor concern about possible higher interest rates receded.

Tokyo, Shanghai, Hong Kong and Sydney declined.

Seoul advanced.

Overnight, Wall Street’s bench-mark S&P 500 index climbed 2.4 per cent, recovering most of its losses from the past week. That came after a selloff in United States (US) Treasury bonds eased.

That helped to assuage investor concerns that the cost of borrowing might rise, putting downward pressure on the US economic recovery.

“Asian markets appear to be taking a breather this morning, having led the global equity recovery yesterday,” Jeffrey Halley of Oanda said in a report.

Also yesterday, Australia’s central bank left its policy unchanged at its March meeting.

Meanwhile, Japan reported employment rose despite a state of emergency to cope with renewed coronavirus outbreaks and South Korea reported higher factory output.

The Shanghai Composite Index lost 1.5 per cent to 3,497.78 and the Nikkei 225 in Tokyo declined 0.9 per cent to 29,384.85. The Hang Seng in Hong Kong declined 1.5 per cent to 29,020.46.

The Kospi in Seoul advanced 0.4 per cent to 3,024.16 after the government reported factory production increased by a better-than-forecast 7.5 per cent in January over a year earlier, up from December’s 2.5 per cent. The S&P-ASX 200 in Sydney was off 0.4 per cent at 6,762.30. India’s Sensex opened up 0.4 per cent at 50,021.56. New Zealand and Southeast Asian markets rose.

On Wall Street, the S&P 500 rose to 3,901.82 in its biggest single-day gain since June 5. The Dow Jones Industrial Average gained two per cent to 31,535.51. The Nasdaq composite climbed three per cent to 13,588.83.

The yield on the 10-year Treasury, or the difference between its market price and the payout if an investor holds it to maturity, fell to 1.43 per cent after reaching its highest level in more than a year last week.

Stocks turned lower in late February after a rapid rise in bond yields, caused by a fall in their market price, fuelled concerns about higher inflation. The yield on the 10-year Treasury note climbed as high as 1.5 per cent. It was at 1.41 per cent yesterday.

Bond yields influence rates on mortgages and other borrowing.

They have climbed as investors bet coronavirus vaccination efforts would get economic growth back on track. That fuelled concerns about inflation and prompted investors to move money out of bonds and into stocks and other assets that do better when consumer prices rise.

Investors are looking for more information about the US economic outlook when Federal Reserve officials deliver speeches this week. Lael Brainard, an advocate for looser monetary policies, gave a monetary policy speech yesterday and Fed Chair Jerome Powell speaks tomorrow.

They also are watching Washington after the House of Representatives approved US President Joe Biden’s USD1.9 trillion economic aid package early Saturday and sent it to the Senate. It includes one-time payments to the public and aid to struggling businesses and local governments.

Johnson & Johnson rose 0.5 per cent after the Food and Drug Administration approved the company’s coronavirus vaccine, one that does not require extremely cold refrigeration like the ones made by Moderna and Pfizer.

In energy markets, benchmark US crude fell 79 cents to USD59.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract sank 86 cents to USD60.64 on Monday. Brent crude, used to price international oils, retreated 81 cents to USD62.88 per barrel in London. It declined 73 cents the previous session to USD63.69 per barrel.