Asian stocks look set to follow U.S. peers lower after Federal Reserve Chairman Jerome Powell refrained from pushing back against the recent surge in bond yields. Treasuries slumped.
Futures in Japan and Hong Kong were in the red and Australian shares fell at the open after the S&P 500 erased nearly all its 2021 gains. The Nasdaq 100 extended losses to almost 10% from February’s high, and small caps fell roughly 3%. S&P 500 futures opened steady.
Australian bond yields pushed higher, tracking a jump in the 10-year Treasury to 1.56% that lifted the yield curve to its steepest point since 2015. The U.S. dollar strengthened, pushing Japan’s yen to a seven-month low.
Oil prices leapt after the OPEC+ alliance surprised traders with its decision to keep output unchanged, signaling a tighter market in the months ahead. Bitcoin fell with other risk assets.
Powell noted the recent runup in yields without hinting at intervention, saying that he would be “concerned by disorderly conditions.” While some investors view the rates moves as a sign of economic strength, others are growing concerned about rising inflation and the impact of higher yields on elevated stock valuations.
“It makes logical and intuitive sense that Treasury yields should move back up to 1.50% or 2%, but we are concerned with the rest of the market about the speed at which it’s getting there,” said Mona Mahajan, investment strategist at Allianz Global Investors LLC.
Stock-Market Momentum Comeuppance Gets No Sympathy From the Fed
Meanwhile, the U.S. Senate voted to take up a $1.9 trillion relief bill backed by President Joe Biden, setting off a debate expected to end this weekend with approval of the nation’s sixth stimulus since the pandemic-triggered lockdowns that began a year ago.
The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.
These are some of the main moves in markets:
- The S&P 500 fell 1.3%, futures were steady
- The Stoxx Europe 600 Index fell 0.4%.
- Nikkei 225 futures fell 0.2%.
- Hang Seng futures dropped 1.2%.
- S&P/ASX 200 fell 0.5%.
- The Bloomberg Dollar Spot Index rose 0.7%.
- The euro was steady at $1.1967.
- The Japanese yen touched 10.8.00 per dollar, its lowest since July.
- The yield on 10-year Treasuries rose eight basis points to 1.56%.
- Australia’s 10-year yield rose six basis points to 1.84%.
- West Texas Intermediate crude jumped 0.9% to $64.37 a barrel.
- Gold was flat around $1,698.15 an ounce.
(A previus version corrected the spelling of Reddit)