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HONG KONG : Asia stocks traded mixed on Wednesday and benchmark U.S. Treasury yields were near multi-year highs, as investors sour on both stocks and bonds amid worries about the impact of higher-for-longer interest rates.
The dollar index further rose after hitting a 10-month high on Tuesday, while the Japanese yen came closer to a key level where Japanese officials are seen as potentially intervening to shore up the currency.
Profits at China’s industrial firms fell 11.7 per cent in the first eight months from a year earlier, official data showed on Wednesday. In Australia, inflation picked up in August, driven by a surge in fuel prices, but the gain was in line with expectations.
A Bank of Thailand rate decision is due later in the day.
Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 per cent. The index is down 3.7 per cent so far this month. U.S. stock futures, the S&P 500 e-minis, were up 0.13 per cent.
Australian shares were down 0.25 per cent, while Japan’s Nikkei stock index slid 0.47 per cent.
China’s blue-chip CSI300 index was 0.41 per cent higher in early trade. Hong Kong’s Hang Seng index advanced 0.8 per cent.
On Tuesday, Wall Street’s major stock indexes followed Asian and European equities lower as investors continued to digest last week’s indication from the Federal Reserve that it would keep rates higher for longer than investors had previously expected.
The Dow posted its biggest one-day percentage drop since March, while all three major averages ended at their lowest closing levels in well over three months.
The Dow Jones Industrial Average fell 1.14 per cent, the S&P 500 lost 1.47 per cent and the Nasdaq Composite dropped 1.57 per cent.
In currencies, the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, advanced 0.085 per cent to 106.3, after hitting 106.21 on Tuesday, the highest since Nov. 30. The European single currency was down 0.1 per cent on the day at $1.0564, having lost 2.56 per cent in a month.
The Japanese yen remained weak versus the greenback at 149.06 per dollar. The dollar’s strength against the yen in particular has kept traders on alert for an intervention to prop up the Japanese currency, especially after Finance Minister Shunichi Suzuki said no options were off the table.
The 150 yen per dollar level is seen by financial markets as a red line that would spur Japanese authorities to act, as they did last year.
“USD/JPY traded in a fairly narrow range overnight and is currently trading just above 149. Higher U.S. Treasury yields and recent dovish comments from Bank of Japan (BoJ) officials have weighed on USD/JPY,” CBA analysts said in a note. “We see a high risk the BoJ intervenes soon to prop up the JPY.”
In treasuries, benchmark 10-year Treasury yields have climbed to 16-year highs in the wake of the Federal Reserve’s hawkish longer-term rate outlook last week. The yield reached 4.5274 per cent on the day, compared with its U.S. close of 4.558 per cent on Tuesday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 5.0603 per cent compared with a U.S. close of 5.077 per cent.
Oil prices settled higher after reaching a two-week low earlier in Tuesday’s session, as investors weighed expectations of tighter supply against demand concerns stemming from an uncertain economic outlook.
U.S. crude ticked up 0.34 per cent to $90.7 a barrel. Brent crude rose to $94.26 per barrel.
Gold was slightly higher. Spot gold was traded at $1901.204 per ounce.
(Editing by Jamie Freed)
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