Asian stocks fall on valuation concerns, high U.S. yields
MSCI’s broadest index of Asia-Pacific shares outdoors Japan deepened losses with a close to 2 per cent drop, whereas high-flying technology stocks in South Korea and Taiwan had been among the many area’s largest decliners.
Sentiment in Philippines took an extra hit, with stocks down practically 1 per cent, as Covid-19 restrictions had been prolonged within the capital earlier this week.
Elsewhere, U.S. Federal Reserve Chairman Jerome Powell soothed inflation considerations and reiterated an accommodative coverage stance in an in a single day speech, however didn’t handle potential dangers from rising bond yields.
“I think Chair Powell did as much as he could in terms of dampening down on expectations of tapering, without introducing new steps. The reality is that the market is nervous regardless,” mentioned Mitul Kotecha, a strategist at TD Securities. Higher U.S. actual yields and “froth” in some sectors had been fuelling considerations of a deeper correction, he mentioned.
So far this yr, the Asia-ex Japan index has risen greater than 7 per cent, constructing on a 20 per cent surge in 2020.
Asian bond yields inched down in keeping with U.S. yields after Powell’s feedback however hovered close to multi-month highs scaled lately.
“The Asian local currency bond market picture looks precarious at present, largely due to the sharp back up in U.S. Treasury yields. This is likely to weigh on foreign bond portfolio inflows in the weeks ahead,” Kotecha famous.
Bucking the development, Singapore stocks rose 1.2 per cent after Oversea-Chinese Banking Corp reported a smaller-than-expected decline in quarterly revenue, boosting native financial institution shares and sending OCBC’s inventory 2.3 per cent greater.
In the Philippines, meals and beverage maker Universal Robina fell 2 per cent, whereas restaurant operator Jollibee Foods Corp shed 2.9 per cent.
