©Reuters. Passers-by are silhouetted as they walk past an electricity stock trading board outside a brokerage in Tokyo, Japan, October 18, 2022 REUTERS/Issei Kato
By Ankur Banerjee
SINGAPORE (Reuters) – Asian stock markets fell on Thursday as investor fears of an impending recession dampened risk appetite, while Treasury yields rose on expectations the Federal Reserve will remain aggressive on their interest rate increases.
Japan’s yen slipped near the psychological barrier of 150 per dollar after hitting a fresh 32-year low of 149.93.
The yield on the US 10-year Treasury note touched a new 14-year high, ruling out a weak housing report. US 10-year bond yields last rose to 4.139%, up from a previous high of 4.136%.
“Yields rose to new cycle highs and risk appetite soured,” said Taylor Nugent, a markets economist at National Australia Bank in Sydney, adding that hawkish comments from central banks also weighed on sentiment.
Wall Street snapped a two-day winning streak on Wednesday, while the dollar rebounded from two-week lows.
MSCI’s broader index of Asia-Pacific shares outside Japan fell to a more than two-year low of 436.0 and was down 1.6% at 437.16,
Australia’s was 1.12% lower, while it opened 1% lower at 26,981.75 on Thursday.
China’s stock market opened 0.5% lower as the ruling Communist Party’s congress, held twice a decade, remains in session this week.
China kept its benchmark interest rates unchanged for the second month in a row on Thursday as authorities delayed launching more monetary stimulus to avoid a sharp policy divergence with other major economies.
In currency markets, the US dollar strengthened as investors flocked to the safe haven after inflation data around the world raised the possibility that central banks would continue interest rate hikes.
On Wednesday, Federal Reserve Bank of Minneapolis President Neel Kashkari said labor market demand remains strong and underlying inflationary pressures likely haven’t peaked yet.
The US central bank is widely expected to raise rates by 75 basis points for the fourth time in a row at its November meeting.
Still, the Fed’s “Beige Book” survey of economic activity showed some easing in several districts, but businesses noted that price pressures remained elevated.
The rising dollar and yields pushed gold lower, with prices holding at a three-week low on Thursday. [/GOL]
The fragile yen has been on a losing streak for 11 consecutive sessions as of Wednesday’s close, renewing 32-year lows in the last six sessions. [/FRX]
“The ever-looming threat of official currency intervention is perhaps slowing the pace we might otherwise have seen given higher global rates,” said Nugent of the National Australia Bank.
Last month, Japan intervened in the foreign exchange market to buy yen for the first time since 1998, in an attempt to prop up the ailing currency.