Hong Kong: Asian markets went into reverse Wednesday, tracking fresh losses on Wall Street as investors fret about rising US Treasury yields and speculation that interest rates will rise four times this year.
Technology firms were once again in the firing line in response to a plunge in Google parent Alphabet on costs worries, while Apple shares suffered a fifth straight loss because of concerns over the crucial smartphone sector.
The yield on benchmark 10-year Treasuries broke three percent on Tuesday for the first time in more than four years as surging oil prices and the impact of Donald Trump’s huge tax cuts fan inflation expectations.
There is a fear the higher yields will divert investor attention from equities as safe-bet government debt looks more attractive.
That, along with an improving economy, has fanned talk the Federal Reserve will have to raise borrowing costs more than expected this year.
The dollar built on gains against its peers on expectations of higher rates. Wako Ogawa, director of foreign exchange sales at Deutsche Securities, told Bloomberg News: “I expect a further rise in Treasury yields to continue to spur buying of the dollar.”
All three main indexes in New York ended deep in the red Tuesday, with the Dow clocking up a fifth successive loss. Sentiment was also dented when construction and mining equipment giant Caterpillar gave a subdued earnings outlook.
Source: Brecorder
