HONG KONG, June 14 — Asian shares tumbled today after Wall Street hit a confirmed bear market milestone and bond yields struck a two-decade high on fears aggressive US interest rate hikes would push the world’s largest economy into recession.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.9 per cent.
Australian shares sank 5 per cent in early trade, while Japan’s Nikkei stock index was down 1.74 per cent.
In Hong Kong, the Hang Seng Index slipped 1.44 per cent and China’s CSI300 Index was down nearly 1 per cent at the open.
The negative tone in Asia follows a bleak session in the US yesterday, which saw Goldman Sachs forecast a 75 basis point interest rate hike at the Federal Reserve’s next policy meeting tomorrow.
“The US will see rate rises faster and higher than Wall Street has been expecting,” James Rosenberg, Ord Minnett advisor in Sydney told Reuters.
“There will likely be the double impact of earnings forecasts being trimmed and further price to earnings derating.” Expectations for aggressive US rate hikes rose after inflation in the year to May shot up by a sharper than predicted 8.6 per cent.
Fears of higher rates leading to a US recession kicked the S&P 500 down 3.88 per cent, while the Nasdaq Composite lost 4.68 per cent. The Dow Jones Industrial Average fell 2.8 per cent.
The benchmark S&P 500 is now down more than 20 per cent from its most recent record closing high, confirming a bear market, according to a commonly used definition.
In US trading, benchmark 10-year Treasury yields hit their highest since 2011 yesterday and a key part of the yield curve inverted for the first time since April as investors braced for the prospect that attempts to stem soaring inflation would dent the economy.
Early in Asia, the yield on benchmark 10-year Treasury notes rose to 3.3828 per cent compared with its US close of 3.371 per cent yesterday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 3.4002 per cent compared with a US close of 3.281 per cent.
“Higher inflation, slower growth and higher interest rates are a damaging combination for financial assets,” ANZ strategists wrote today.
The dollar dropped 0.06 per cent against the yen to 134.32 but remains close to its more-than-two-decade high of 135.17 reached yesterday.
The European single currency was flat at US$1.0407 (RM6.22), having lost 3.04 per cent in a month, while the dollar index, which tracks the greenback against a basket of major currencies, was up at 105.19.
Bitcoin fell around 4.5 per cent today to US$21,416, a fresh 18 month low, extending yesterday’s 15 per cent fall as markets were jolted by crypto lender Celsius suspending withdrawals.
US crude dipped 0.06 per cent to US$122.14 a barrel. Brent crude was down 0.13 per cent 122.14 per barrel.
Gold was slightly lower with the spot price at US$1,818.7395 per ounce. — Reuters
