by Scott Murdock
HONG KONG, June 14 (Reuters) – Asian stocks tumbled on Tuesday after Wall Street hit a confirmed bear market milestone and bond yields hit a two-decade high on fears aggressive rate hikes US interest rates drive the world’s largest economy into recession.
MSCI’s broader index of Asia-Pacific stocks outside of Japan fell 0.9%.
Australian S&P/ASX200 shares sank 5% in early trading, while Japan’s Nikkei stock index fell 1.74%.
In Hong Kong, the Hang Seng Index fell 1.44% and China’s CSI300 Index was down nearly 1% at the open.
The negative tone in Asia follows a gloomy session in the US on Monday, in which Goldman Sachs forecast a 75 basis point interest rate hike at the Federal Reserve’s next monetary policy meeting on Wednesday.
“The US will see faster and higher rate increases than Wall Street expected,” James Rosenberg, an adviser at Ord Minnett in Sydney, told Reuters. “There is likely to be the double whammy of lower earnings forecasts and a further reduction in earnings price.”
Expectations for aggressive US rate hikes rose after inflation in the year to May shot up a stronger-than-expected 8.6%.
Fears that higher rates will lead to a US recession sent the S&P 500 down 3.88%, while the Nasdaq Composite lost 4.68%. The Dow Jones Industrial Average fell 2.8%.
The benchmark S&P 500 Index is now down more than 20% from its most recent record closing high, confirming a bear market, by a commonly used definition.
In US trade, benchmark 10-year Treasury yields hit their highest level since 2011 on Monday and a key part of the yield curve inverted for the first time since April as investors braced. for the prospect that attempts to rein in runaway inflation would hurt the economy.
Earlier in Asia, the benchmark 10-year Treasury yield rose to 3.3828% compared to the US close of 3.371% on Monday.
The two-year yield, rising on traders’ expectations of higher fed funds rates, hit 3.4002% compared with a US close of 3.281%.
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“Higher inflation, slower growth and higher interest rates are a harmful combination for financial assets,” ANZ strategists wrote on Tuesday.
The dollar fell 0.06% against the yen to 134.32, but remains close to its more than two-decade high of 135.17 reached on Monday.
Europe’s single currency was flat at $1.0407, having lost 3.04% in a month, while the dollar index, which tracks the greenback against a basket of major currencies, rose to 105.19. .
Bitcoin fell around 4.5% on Tuesday to $21,416, a new 18-month low, extending Monday’s 15% drop as markets were rocked by crypto lender Celsius’s suspension of withdrawals.
US crude fell 0.06% to $122.14 a barrel. Brent crude fell 0.13% to 122.14 a barrel.
Gold was slightly lower with the spot price at $1,818.7395 per ounce.
(Reporting by Scott Murdoch in Hong Kong; Additional reporting by Alun John; Editing by Sam Holmes)
Source: finance.yahoo.com