Asian stocks fall as inflation worries stalk markets

Asia-Pacific equities fell on Thursday after negative sentiment on Wall Street and concerns over rising bond yields spilled over into the region.

Japan’s Topix index lost 1.8 per cent, while in China the CSI-300 index of Shanghai- and Shenzhen-listed stocks dropped 2.7 per cent. In Hong Kong, the Hang Seng lost 2.6 per cent, while Australia and South Korean equities were also lower.

The moves came after the S&P 500 fell 1.3 per cent on Wednesday, with tech stocks declining sharply for the second day in a row and US 10-year Treasury yields climbing to about 1.47 per cent. In Asian trading, the 10-year US Treasury was trading at just below 1.48 per cent.

The US Senate has begun debating President Joe Biden’s $1.9tn stimulus package, with analysts predicting it could boost not only economic growth but also consumer prices.

This has stoked volatility in US bond yields as traders look for signs the Federal Reserve could tighten monetary policy.

Jingyi Pan, senior market strategist at IG Group, said increasing US Treasury yields and falls in American stocks had put Asian markets in a “dismal mood”.

“After steadying since the start of the week, it appears that we have returned to watching the bond yields climb,” she noted, adding that this had “invited the jitters back to the foreground”.

China’s CSI 300 has fallen more than 8 per cent over recent weeks after hitting an all-time high in February. The index remains up over the year to date, however. 

Moutai, the spirits maker that rallied last year, has lost over 20 per cent of its value since mid-February, wiping more than $100bn from its market capitalisation.

Earlier this week, Guo Shuqing, China’s top banking regulator, warned of the risk of “bubbles” in international markets and their potential impact on the country’s financial system.

Elsewhere, Brent crude, the international oil benchmark, added 0.5 per cent to trade at $64.4 per barrel ahead of a meeting of Opec+ producers later on Thursday.