Asian stocks open lower on inflation fears

In early Asia trade, Australia's S&P/ASX 200 was down 0.5 per cent, South Korea's KOSPI shed 0.4 per cent while Japan's Nikkei 225 was down 0.9 per cent. ― Reuters pic
In early Asia trade, Australia's S&P/ASX 200 was down 0.5 per cent, South Korea's KOSPI shed 0.4 per cent while Japan's Nikkei 225 was down 0.9 per cent. ― Reuters pic

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MIAMI, Feb 23 ― Asian equities opened lower today on concerns about rising interest rates and rich equity valuations and following a downdraft in US and European overnight trading.

The Dow and S&P 500 recouped early losses after Federal Reserve Chair Jerome Powell reiterated in testimony before the Senate Banking Committee that monetary policy would remain accommodative and would not change without advance warning.

The tech-heavy Nasdaq index closed down 0.5 per cent as investors sold the big tech stocks that have driven the market rally since last March, and rotated into cyclicals, helping lift the Dow and S&P 500.

But Powell's testimony hasn't fully swept away fears of rising inflation as the economies around the world are expected to rebound this year more strongly than was expected just weeks go as vaccines roll out around the world.

“Despite reassuring words from Mr Powell markets know that if the US inflation ... hits over 2 per cent, then the Fed will have difficulty in maintaining its support for economies and markets”, said Michael McCarthy, Chief Markets Strategist at CMC Markets in Sydney.

In early Asia trade, Australia's S&P/ASX 200 was down 0.5 per cent, South Korea's KOSPI shed 0.4 per cent while Japan's Nikkei 225 was down 0.9 per cent. Hong Kong's Hang Seng index futures were down 0.37 per cent.

US tech stocks fell as investors sold recent winners to rotate into assets that are expected to do well in an improving economy. The tech-heavy Nasdaq dropped 0.5 per cent while in Europe tech stocks posted their worst two-day decline in four months, falling 3.7 per cent.

Tesla Inc lost 2.2 per cent to close in negative territory for the year, pulled down amid the tech selloff and falling bitcoin, which lost 12 per cent. Tesla recently invested US$1.5 billion (RM6.06 billion) in the cryptocurrency.

The Dow Jones Industrial Average rose 15.66 points, or 0.05 per cent, to 31,537.35, the S&P 500 gained 4.87 points, or 0.13 per cent, to 3,881.37.

Spot gold added 0.1 per cent to US$1,806.25 an ounce.

The dollar index fell 0.037 per cent, with the euro up 0.04 per cent to US$1.2154.

US crude settled down 3 cents to US$61.67 a barrel yesterday, still close to its highest levels since January 2020. Brent crude settled up 13 cents, or 0.2 per cent, to US$65.37 a barrel.

The 10-year US Treasury note was down 1.4 basis point at 1.3551 per cent in late US trade. It touched a high of 1.389 per cent early yesterday before Powell's testimony.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was little changed at 0.1169 per cent. ― Reuters

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