BROWSE

EMERGING MARKETS-Asian stocks, bonds sold off as U.S. Treasury yields spike | Reuters

Asian equities dropped further and bond yields rose on Friday after U.S. Treasury yields jumped, as prospects for higher inflation and economic growth increased, making investors doubt that central banks would retain ultra-low interest rates for a longer period. Overnight, the benchmark 10-year U.S. yield touched its highest in a year at 1.614%, causing a sell-off in U.S. equities. "The bond market is signalling disbelief that the Fed could continue keeping rates at such low levels in the face of a recovering economy and rising commodity costs," analysts at OCBC wrote in a note. They warned that further turmoil in equity markets was expected if bond yields continued rising as investors looked to rebalance their portfolios. Rising bond yields threaten the allure of stocks' dividend yield, while companies also face a higher debt-servicing burden because of steeper borrowing costs, making investing in the relatively riskier stocks less attractive overall. India's 10-year bond yield climbed 6 basis points to its highest since early May last year at 6.242%, while Malaysian yields surged to 3.054%, hitting their highest since July 1, 2020. Indonesian bonds also succumbed, with yields spiking almost 8 basis points to 6.617%. Yields had initially held steady after the country's finance minister said on Wednesday 2021 financing plans might be scaled back. Equity markets in South Korea and Taiwan, whose technology stocks have come under added pressure amid the spike in global bond yields due to fears they may be overvalued, bore the brunt of the sell-off, falling 3.3% and 2.9%, respectively. Philippine stocks and the peso were the sole gainers in the region as trade resumed after a local holiday on Thursday. The rise came after a subdued performance through the week when regional stocks had seen bigger gains. Malaysian stocks also saw relatively thinner losses, after data showed exports rose 6.6% in January, while imports slowed slightly. The growing view that ultra-low interest rates may be raised sooner than expected supported the dollar, which put pressure on most Asian currencies. The South Korean won slipped as much as 1.5% to a three-week low, while the Indonesian rupiah fell 0.9% to a more than nine-week low of 14,201 per dollar. The Indian rupee fell nearly 1% against the dollar. The currency was set to end the week 0.5% weaker, after six-consecutive weeks of strengthening amid improved economic outlook and dollar weakness. Thai markets were shut for a local holiday. HIGHLIGHTS: ** In the Philippines, top index gainers are Bank of the Philippine Islands, up 5.83%, and Robinsons Retail Holdings Inc, up 4.72% ** Top losers on the Singapore STI include: Venture Corporation Ltd, down 2.44%, and Dairy Farm International Holdings Ltd, down 2.24% ** Indonesian 3-year benchmark yields are up 12.3 basis points at 5.419%​​ Asia stock indexes and currencies at 0713 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCK DAILY YTD % X DAILY S YTD % % % Japan +0.05 -2.75 <.N2 -3.99 5.55 25> China <CNY=CFX -0.22 +0.90 <.SS -2.03 1.13 S> EC> India -0.94 -0.05 <.NS -3.17 4.55 EI> Indones -0.85 -1.13 <.JK -1.24 3.89 ia SE> Malaysi -0.23 -0.68 <.KL -0.08 -2.88 a SE> Philipp +0.72 -1.21 <.PS 0.58 -4.83 ines I> S.Korea <KRW=KFT -1.40 -3.32 <.KS -2.80 4.85 C> 11> Singapo -0.28 -0.60 <.ST -0.95 3.57 re I> Taiwan +1.49 +2.30 <.TW -3.03 8.29 II> (Reporting by Rashmi Ashok in Bengaluru; Editing by Subhranshu Sahu)

Comments are closed.