The major Asia-Pacific stock indexes finish lower across the board on Thursday, led by a steep drop in technology shares, fueled by a similar move on Wall Street on Wednesday. The catalyst behind both moves was a rise in bond yields.
During the U.S. session, the 10-year Treasury yield ticked up to 1.47%, pressuring areas of the market with high valuations. It was still off last week’s peak of above 1.61% that roiled stock markets as investors bet on rising inflation.
Rising interest rates disproportionately hurt high-growth companies in both the U.S. and Asia because investors value them based on earnings expected years into the future, and high interest rates hurt the value of futures earnings more than the value of earnings made in the short-term.
In the cash market on Thursday, Japan’s Nikkei 225 Index settled at 28930.11, down 628.99 or -2.13%. Hong Kong’s Hang Seng Index finished at 29236.79, down 643.63 or -2.15% and South Korea’s KOSPI Index closed at 3043.49, down 39.50 or -1.28%.
In China, the Shanghai Index settled at 3503.49, down 73.41 or -2.06% and in Australia, the S&P/ASX 200 Index finished at 6760.70, down 57.30 or -0.84%.
Global Selling Trips Australian Shares
Australian shares fell on Thursday as renewed worries about rising U.S. bond yields soured risk sentiment globally.
The S&P/ASX 200 Index was also weighed down by miners Rio Tinto and BHP Group and supermarket chain Woolworths Group as they traded ex-dividend.
Tech stocks fell 1.5%, tracking a sell-off in U.S. peers. Buy-now-pay-later firm Afterpay slid more than 2%, while Xero Ltd shed 3%.
In economic news, Australia’s January retail sales increased 0.5% month on month on a seasonally adjusted basis, according to data published Thursday by the Bureau of Statistics. That compared against expectations for a 0.6% increase in a Reuters poll.
The country also recorded a trade surplus of 10.142 billion Australian Dollars (about $7.88 billion), higher than expectations in a Reuters poll for a 6.5 billion Australian Dollar trade surplus.
Hong Kong Stocks End Lower on Material, Tech Firms
Hong Kong shares dropped on Thursday, weighed down by losses in material and tech stocks, as equities globally retreated on renewed doubts over monetary support after another rise in U.S. Treasury yields. The sub-index of the Hang Seng tracking tech shares dipped 5.8%, while the IT sector dropped 5.3%, and the material sector ended 6.4% lower.
Japan’s Nikkei Hits 1-Month Low as US Futures Slump
Japan’s Nikkei Index on Thursday dropped to its lowest in one month, as investors sold off heavyweights including SoftBank Group and Fast Retailing, tracking a slump in U.S. futures during the Asian trade.
SoftBank Group fell 5.19% in the wake of news that British supply chain finance firm Greensill Capital, which is backed by the Japanese conglomerate, was in talks to sell large parts of its business.
“There are uncertainties in the move of U.S. bond yields, which has made the market outlook unclear,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.