Asian stocks fell sharply tracking selloff on Wall Street on Thursday on concerns over inflation and virus situation in China.
Shares in Mainland China, Hong Kong, South Korea, Thailand and Japan fell over 1% each. The MSCI Broad Market Index ex Japan is trading higher by 0.56%.
U.S. Treasuries rallied overnight and were steady in Asia, leaving the yield on benchmark 10-year Treasury notes at 2.8931%.
“The bounce on Tuesday was proven to have been ‘too optimistic’, thus the self-doubt stemming from the misjudgement only makes traders to click the sell button even harder,” said Hebe Chen, market analyst at IG as reported by Reuters.
“It must be said that the concern for inflation has never gone away since we stepped into 2022, however, while things haven’t reached the point of no return, they are seemingly heading in the direction of ‘out of control’. That, is probably the most worrying part for the market.
The U.S. dollar, which had rallied on falling risk appetite, paused its gains on Thursday, with the greenback easing 0.05% against a basket of major currencies. The Japanese yen, on the other hand, fell 0.2% against the dollar.
“There may be short-term bounces in equities like the last few days, but the big picture is that the era of low yields are over, and we are transitioning to a higher rates environment,” Hafeez told the Reuters Global Markets Forum.
“This will pressure all the markets that benefited from low yields – especially equities.”
Oil futures were mixed on Thursday morning. U.S. crude dipped 0.2% to $109.38 a barrel. Brent crude rose 0.26% to $109.4 per barrel.