News: Asian stocks slip as global rally skids on inflation fears.
MIAMI (Reuters) – Asian stocks eased Tuesday as rising US Treasury yields and inflation prospects led to another rotation of the big Tech- stocks responsible for a major rally on Wall Street during the pandemic.
The Australian S & P / ASX 200 fell 0.11% and the South Korean Kospi fell 0.87% in early trading. Hong Kong’s Hang Seng Index Futures rose 0.54%. The Japanese markets are closed on Tuesday for public holidays.
Oil prices soared on the tense global supply outlook after cold weather hit US production and an upcoming meeting of the best crude oil producers is expected to largely keep production in check.
Bond yields rose sharply this month as the prospect of further fiscal stimulus in the US raised hopes for a faster global economic recovery.
However, this is also driving inflation expectations and causing investors to sell the growth stocks that sparked the stock rally during the pandemic.
“A bond sell-off is like a slow-motion car accident for stock investors,” said Michael McCarthy, chief market strategist at CMC Markets broker in Sydney. “A higher interest rate environment forces investors to consider the opportunity cost of investing. Stocks that have significant borrowing or no income for investors may be particularly vulnerable. “
On Wall Street, the Dow Jones Industrial Average rose 0.09% and posted a small gain. The S&P 500 was down 0.77% and the Nasdaq Composite was down 2.46%.
High-growth stocks, including Apple Inc, Microsoft Corp, Tesla Inc, and Amazon.com, dragged the Nasdaq down and weighed on the S&P 500.
The Australian dollar was near breakeven against the greenback at $ 0.791 after hitting a new three-year high.
Commodity prices rose in part as the US dollar continues its broad-based weakness. Spot gold rose 0.06% to $ 1,809.69 an ounce.
MSCI’s all-country world index, which looks at stock market performance in 45 countries, gained 0.04%.
Federal Reserve Chairman Jerome Powell is giving his semi-annual testimony in front of Congress starting Tuesday and is likely to reiterate his commitment to keep policies super simple for as long as possible in order to boost inflation.
US economic growth, measured in terms of gross domestic product, is likely to be stronger than ever in the past 35 years and, according to Credit Suisse, corporate investment is likely to be twice as fast as the economy as a whole.
MSCI’s broadest index for Asia-Pacific stocks outside of Japan fell 1.18% on Monday after slipping from a record high last week as the rise in US bond yields unsettled investors.
The dollar index fell 0.287% and the euro 0.09% to $ 1.2165. The Japanese yen gained 0.06% against the greenback to 104.99 per dollar.
Reporting from Echo Wang in Miami; Editing by Sam Holmes
Original Source © Reuters