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Asian Stocks Down as U.S. Treasury Yields Climb

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By Zhang Mengying

Investing.com – Asia Pacific stocks were mostly down on Tuesday morning amid a rise in U.S. Treasury yields.

Japan’s Nikkei 225 gained 0.42% by 10:33 PM ET (2:33 AM GMT).

The yen plunged to a 20-year low on a widening interest-rate gap. The yen’s sharp decline and surging commodity prices also dented consumers’ confidence. Government data released on Monday showed that household spending decreased 1.7% in April year on year. Bank of Japan Governor Haruhiko Kuroda reiterated on Monday an unwavering commitment to “powerful” monetary stimulus.

South Korea’s KOSPI fell 1.39%.

In Australia, the ASX 200 was down 0.79%. The Reserve Bank of Australia will hand down its policy decision later in the day, which is widely expected to deliver back-to-back interest rate hikes for the first time in 12 years.

Hong Kong’s Hang Seng Index was down 0.40.

China’s Shanghai Composite inched down 0.08% while the Shenzhen Component inched down 0.09%. China is easing COVID-19 curbs and has announced 33 measures covering fiscal, financial, investment, and industrial policies to help stabilize the economy.

The 10 Year Treasury yield rose 9.9 basis points (bps) overnight and hit 3.0580% early in the Asia session.

A strong U.S. jobs report released last Friday raised bets that the U.S. Federal Reserve will remain assertive on inflation. Investors now await the U.S. consumer price index (CPI) for clues on the interest rate hike path.

"Inflation concerns are not going anywhere fast,” City Index senior financial markets analyst Fiona Cincotta said in a note.

"Rising crude oil prices and a strong labor report have lifted bets that the Fed may need to act aggressively to rein in inflation."

The European Central Bank (ECB) will announce an end to bond purchases this week, and formally begin the countdown to an increase in borrowing costs in July. The ECB will hand down its policy decision this Thursday.

On the data front, China’s CPI and producer price index (PPI) are due on Friday.

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