NEW YORK, March 4 (Reuters). Asian stocks slipped on Friday as rising U.S. treasury yields once again sent stock investors down as they lifted the dollar to a three-month high, pulling the Japanese yen back to an eight-month trough.
Energy markets have also not been spared the volatility, with oil prices rising more than 5% overnight to their highest in more than a year, after OPEC and its allies agreed to keep production unchanged in April as the recovery of the question of the coronavirus pandemic was still fragile.
At the start of Friday, Australian shares plunged 1%, Nikkei shares in Japan lost 0.7%, shares in Seoul fell 0.24% and the E-Mini S&P futures contract was a tikkie lower at 0.04%.
US stocks fell sharply on Thursday after Federal Reserve Chairman Jerome Powell disappointed some investors by failing to signal that the Fed could sharpen long-term bond purchases to keep interest rates longer.
The tech-savvy Nasdaq Composite tumbled 2.1%, down about 10% from its Feb. 12 record and brought it to the right.
Although Powell made it clear that the Fed would not soon change its ultra-loose stance on monetary policy, some analysts were still concerned that rising Treasury yields could mean higher borrowing costs, which could limit the fragile economic recovery in the US .
“The US dollar has risen 0.8%, and there you see the sacred trinity of market fear – rising real rates, rising expectations of rate hikes and a stronger US dollar,” said Chris Weston, head of research at Pepperstone Markets Ltd a foreign exchange broker, in Australia.
Bond investors with a clumsy view of Treasuries paid homage to Powell’s remarks and sold the notes. The yield on 10-year treasury has climbed to above 1.5% to 1.5727%, but last week it is still below an annual high of 1.614%.
The yield curve, a measure of economic expectations, increased in rising yields, with the gap between two and ten-year yields widening overnight by another 6.3 basis points.
Rising treasury yields boost demand for the dollar. The dollar index jumped 0.61% against a basket of major currencies to 91.651, in sight of a three-month high of 91.633.
A stronger dollar hampered the yen. Early Friday, the yen was soft at 107.95, a level not seen since July 1st.
The euro also stumbled through a stronger dollar, with the common currency sluggish at $ 1.19665.
Climbing yields and dollar strength boosted gold prices, which fell to a nine-month low when investors sold the precious metal to reduce the cost of owning the non-yields.
Spot gold slipped another 0.2% early Friday and stood at $ 1,694,0600 per ounce, trading below $ 1,700 for the first time since June 2020.
On the other hand, oil prices rose early Friday after rising overnight.
US crude futures climbed 0.85% to $ 64.38 a barrel after the overnight overnight January 2020 scale of $ 64.86. Analysts said OPEC’s decision not to increase production in April, as many had expected, showed what it was prepared to do to deplete inventories and keep prices up.
In the cryptocurrency market, bitcoin reduced its losses overnight, and was 3.8% lower at $ 48,473 early Friday.
Reporting by Koh Gui Qing; Edited by Sam Holmes