Equites Mixed, Bonds Extended Selloff Weighing on China’s Sentiment and Fed’s Hawkish Signal

Asian equites were mixed while selloff of treasuries resumed as market weighing monetary tightening by central banks to tame down inflation.

Shares in Mainland China and Hong Kong closed edging down while South Korea, Thailand and Japan closed moderately higher.

Foreign investors are pulling out money from mainland shares as lockdown intensifies underscoring growth risks along with the yuan’s weakness against the dollar fell to multi-month lows. Foreigners offloaded 45 billion yuan ($7 billion) of shares onshore through the stock connect in March, the most in two years. Net outflows amounted to 6 billion yuan so far this month through Wednesday, according to data compiled by Bloomberg.

Chinese tech shares fell for the third consecutive day weighing on shares linked to electric-vehicle production as lockdown on mainland disrupted supply chain.

Strong corporate earnings lead to U.S. futures contract S&P 500 and Nasdaq to climb higher. The 10-year Treasury yield added 4 basis points.

Bonds selloff continued after Wednesday’s rally with Bank of America Corp. and Nomura Asset Management who said the panic over inflation and rate-hike bets had gone too far.

“Strong demand allowed firms to pass through input cost increases in consumers,” Carol Kong, a strategist at Commonwealth Bank of Australia, said in a note as reported by Bloomberg.

“The anecdotal evidence supports our view the FOMC is well behind the curve and needs to tighten policy aggressively.”

Crude oil trading higher with the WTI trading around $102 a barrel and the Brent is trading around $107 a barrel.