Wed, December 07, 2022

Widespread losses in Asian stock markets

Southeast Asian stock markets closed with gains

Asia-Pacific stocks fell on Thursday. This comes after negative sentiment on Wall Street and concerns about rising bond yields spread to the region.

Japan’s Topix index lost 1.8%, while China’s CSI-300 index of stocks listed in Shanghai and Shenzhen fell 2.7%. In Hong Kong, the Hang Seng lost 2.6%, while shares in Australia and South Korea also fell.

The moves came after the S&P 500 fell 1.3% on Wednesday, with tech stocks falling sharply for the 2nd day in a row and yields on 10-year US Treasuries climbing to around 1.48%. 

Rising bond yield concerns investors

The United States Senate has begun debating President Joe Biden’s $1.9 trillion stimulus package. Analysts predict it could boost not only economic growth but consumer prices as well.

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

Jingyi Pan, a senior market strategist at IG Group, said rising US Treasury yields and falling US equities had put Asian markets in a gloomy mood. After stabilizing since the beginning of the week, bond yields rise again, he noted. This had caused some concerns.

Japan’s Nikkei 225 NIK, -2.13%, dropped by 2.7%, and the Hang Seng HSI, -1.86% in Hong Kong, fell by 2.6%. Australia’s S&P/ASX 200 XJO, -0.84% decreased by 1.4%.

China worried about bubbles in foreign markets

Investors anticipate that policies outlined during the National People’s Congress’s annual session, a mostly ceremonial legislature that convenes on Friday, may point to a tightening of monetary and government stimulus.

South Korea’s Kospi 180721, -1.28% lost 1.3% after the central bank reported the economy contracted last year for the first time since 1998.

Preliminary data released by the Bank of Korea on Thursday showed the gross domestic product fell 1% from 2019. This is its first annual contraction since South Korea was in the midst of a crippling financial crisis.

China’s CSI 300 has dropped more than 8% in recent weeks after hitting an all-time high in February. However, the index remains higher throughout the year to date.

Moutai, the liquor maker that rebounded last year, has lost more than 20% of its value since mid-February, wiping more than $100 billion from its market capitalization.

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.

Meanwhile, Brent crude, the international benchmark for oil, added 0.5% to trade at $64.4 a barrel ahead of OPEC+ producers meeting later on Thursday.


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