NEW YORK, March 4 (Reuters) – Asian stocks skidded on Friday as rising US Treasury yields shook stock investors again, raising the dollar to a three-month high, which in turn pulled the Japanese yen to a eight-month low.
Energy markets have not been spared volatility either, with oil prices rising more than 5% overnight to a one-year high after OPEC and its allies agreed to keep production unchanged in April, as recovery from demand from the coronavirus pandemic was still fragile.
At the start of trading on Friday, Australian shares fell 1%, Japanese Nikkei shares lost 0.7% on average, Seoul shares fell 0.24%, and E-Mini S&P futures were slightly lower. , by 0.04%.
US stocks fell sharply on Thursday after Federal Reserve Chairman Jerome Powell disappointed some investors, noting that the Fed could step up long-term bond purchases to maintain long-term interest rates.
The technologically strong Nasdaq Composite fell 2.1%, down about 10% from its February 12 record and placing it in correction territory.
Although Powell made it clear that the Fed was not about to change its position on ultra-weak monetary policy any time soon, some analysts still feared that the Treasury’s high yields could herald higher borrowing costs, thus limiting the fragile economic recovery. the USA.
“The US dollar gained 0.8% and that’s where you see the holy trinity of market fears – rising real rates, higher expectations of rate hikes and a stronger US dollar,” said Chris Weston, head of research at Pepperstone Markets Ltd, a broker. foreign exchange in Australia.
Bond investors with a declining view of the Treasury took heart in Powell’s remarks and sold the banknotes. The yield on 10-year Treasuries rose over 1.5% to 1.5727%, but still below a one-year high of 1.614% last week.
The yield curve, a measure of economic expectations, has worsened on the rise in yields, with the difference between two- and 10-year yields increasing by another 6.3 basis points overnight.
Rising treasury yields have strengthened demand for the dollar. The dollar index rose 0.61% against a basket of major currencies to 91.651, at a three-month high of 91.663.
A stronger dollar prevented the yen. Until early Friday, the yen was soft at 107.95, a level not seen since July 1.
The euro was also triggered by a firmer dollar, with the slow common currency at 1.19665 USD.
Rising yields and the strength of the dollar beat gold prices, which fell to a nine-month low as investors sold the precious metal to reduce the opportunity cost of holding the non-yielding asset.
Spot gold fell another 0.2 percent early Friday, reaching $ 1,694,0600 an ounce, trading below $ 1,700 for the first time since June 2020.
Oil prices, on the other hand, extended gains early Friday, after rising overnight.
US gross futures rose 0.85% to $ 64.38 a barrel after peaking in January 2020 at $ 64.86 a night. Analysts said OPEC’s decision not to increase production in April, as many expected, showed what it was prepared to do to deplete a stock surplus and keep prices high.
In the cryptocurrency market, bitcoin reduced overnight losses and fell 3.8% to $ 48,473 early Friday.
Koh Gui Qing’s report; Mountain by Sam Holmes