Asian stocks fall as rising US interest rates hit technology companies

Monitors showing stock index prices and Japanese yen against the US dollar are seen after the New Year’s ceremony marking the opening of trading in 2022 on the Tokyo Stock Exchange (TSE), amid the coronavirus pandemic (COVID-19), in Tokyo, Japan January 4, 2022 REUTERS / Issei Kato

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HONG KONG, January 5 (Reuters) – Asian stocks fell on Wednesday after a mixed Wall Street rally as higher US government interest rates weighed on global technology companies and pushed the dollar to a five-year high against the Japanese yen.

US interest rates rose on Tuesday as bond investors prepared for Federal Reserve rate hikes by mid-year to curb stubbornly high inflation.

MSCI’s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) lost 0.8%, while Japan’s Nikkei (.N225) was slightly unchanged.

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US stock futures also fell with the S&P 500 e-minis down 0.25% and the Nasdaq e-minis lost 0.4%.

“From Asia’s perspective, it’s a slightly more risky tone because it’s one of those days where higher bond yields are a bad thing, since they, although reflecting a stronger US backdrop, tend to support the dollar rather than local. currencies, “said Rob Carnell, head of Asia Pacific Research at ING.

“But it’s pretty choppy, tomorrow we may come back to believing that the higher returns reflect a stronger global backdrop,” Carnell said.

He said overnight declines in the Nasdaq due to higher returns weighed on Asian stock markets given the greater importance of technology stocks in the region.

Hong Kong-listed technology stocks (.HSTECH) lost 3.7% in early trading, while in Japan Nintendo (7974.T) fell 1% and in South Korea Samsung (005930.KS) fell 2% ahead of its quarterly results. read more

US stocks were mixed on Tuesday, while technology-heavy Nasdaq (.IXIC) lost 1.3%, although rising interest rates boosted banks and industry names helped the Dow Jones Industrial Average (.DJI) reach record highs and the S&P 500 (.SPX)) for to reach a record high intraday.

US five-year notes, which reflect expectations of interest rate hikes, rose to their highest level since February 2020, after US two-year interest rates reached their strongest level since March 2020 on Monday.

The reference yield on 10-year US government bonds peaked at six weeks on Tuesday and was last at 1.657%.

Minutes from the Fed’s December meeting, which is to be expected at 1900 GMT, may underscore American politicians’ newly discovered sensitivity to inflation and their willingness to tighten policies.

“The market is now speculating that an interest rate hike in March is possible when the Fed stops buying assets, so returns are increasing,” said Edison Pun, senior market analyst at Saxo Markets in Hong Kong.

He said he thought the decline in technology stocks would be short-lived, while rising returns would help bank stocks.

HSBC’s Hong Kong-listed shares rose 2.3% on Wednesday, although Chinese bad debt manager Huarong (2799.HK) lost 40% by resuming trading following a suspension.

In the foreign exchange markets, the yen was 116.7 per dollar after falling to as low as 116.34 overnight, the lowest since March 2017.

With the Bank of Japan generally expected to be late if not the last in line to raise interest rates, the gap between US and Japanese interest rates is widening, hurting the yen.

The euro was also on the back foot, and the European Central Bank will probably also be slow to raise interest rates. As a result, the dollar index, which measures the dollar against six peers, was 96,272, the strongest end of the last range.

Oil prices fell on Wednesday, giving up some of the gains from the previous session. Brent oil futures fell 0.3%, to $ 79.73 per barrel after peaking at $ 80.26, while US West Texas Intermediate (WTI) crude oil futures lost 0.3% to $ 76.75 per barrel fat.

Spot gold was at 1814 dollars per ounce, stable on the day and at the upper end of the last range.

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Edited by Sam Holmes

Our standards: Thomson Reuters Trust Principles.

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