A currency dealer is talking on the phone while monitoring exchange rates in a trading room at KEB Hana Bank in Seoul on March 9, 2020.
JUNG YEON-JE | AFP through Getty Images
SINGAPORE – Asia-Pacific markets declined on Friday, while investor sentiment became cautious amid new concerns about inflation expectations.
Australian stocks fell after the market opened, with the ASX 200 benchmark down 0.58% – the index resumed some of its previous losses of more than 1%. Most sectors fell: the energy and materials sectors fell by 2.32% and 1.07% respectively, while the heavily weighted financial sub-index lost around 0.1%.
Japan’s Nikkei 225 fell 0.6%, while the Topix index fell 0.32%.
Kospi in South Korea fell 0.84% and Kosdaq fell 0.62% as technology names sold out. Shares of Samsung Electronics fell 0.84%, SK Hynix fell 2.11%, and LG Electronics lost 1.29%.
The Wall Street stock market struggled overnight, where tech stocks hit hard, while the Dow and S&P 500 also fell. This weakness in equities was reflected in an increase in bond yields.
Yields are moving in the opposite direction to prices. Rising bond yields usually signal confidence in the economic recovery and fears about inflation, which may make high-growth stocks seem less attractive to investors.
“It was a mixed session for overnight risky assets as bond yields rose following the FOMC meeting,” analysts at ANZ Research wrote in a note Friday morning. “The Fed will wait for evidence of stronger data before raising its forecasts for funded funds. This has led to rising market measures on inflation expectations, rising bond yields.”
Coins and oil
In the foreign exchange market, the dollar traded almost 91,853 against a basket of his colleagues. Overnight, the green dollar wiped out most of its losses following Wednesday’s Fed decision.
“The Federal Reserve does not intend to raise interest rates until 2023, but the recovery of the dollar and rising treasury yields tell us that investors continue to be drawn to the positive outlook for the economy,” said Kathy Lien, CEO of BK Asset Management. stated in a note Thursday.
Lien explained that the Fed will not be able to keep the US dollar low “because the launch of vaccines and stimulus controls will make a strong recovery in the second quarter and second half.”
The Japanese yen changed hands at 109.02 per dollar, weakening from a previous level around 108.87. The Bank of Japan will close its two-day monetary policy meeting on Friday, and reports suggest the central bank should widen a bandwidth to allow long-term interest rates to hover around the 0% target.
The Australian dollar fell 0.17% to $ 0.7743.
Oil prices fell during trading hours in Asia on Friday. US crude oil fell 0.55% to $ 59.67 a barrel, while Brent’s global benchmark fell 0.51% to $ 62.96.
Overnight, prices fell by almost 7% or more, both for the US gross future and for Brent.
“Crude oil prices have fallen as concerns about weaker short-term demand have deepened,” ANZ analysts wrote. “Following recent updates from the IEA, EIA and OPEC, rising oil demand appears to remain well below optimistic forecasts so far. This comes amid mixed economic data.”
The stronger US dollar has likely weighed on investors in the sector.