Higher yields weigh on equities
Overnight, US markets took fright as US long-dated yields shot higher as inflation nerves grew on Wall Street. The S&P 500 fell 1.68%, the Nasdaq slumped by 2.18%, and the Dow Jones retreated by 1.17%. In Asia, the sell-off continues, with US futures on all three indexes down over 0.40%.
Asian markets have responded in kind, mostly moving lower despite oil concerns easing. Fears around China’s growth and a more hawkish Fed continue to give regional markets a strong headwind. Japan’s Nikkei 225 has fallen by 1.60%, with South Korea’s Kospi 1.10% lower, with Taipei easing by 0.30%.
Chinese markets attempted to follow the ADR rally overnight as Shanghai restrictions were partially eased and the government approved new online games, boosting local tech. Momentum has quickly waned as the small print of Shanghai’s apparent easing is digested, and US futures continue to fall. China markets have fallen into the red with the Shanghai Composite down 0.65%, and the CSI 300 down by 0.35%. Hong Kong has fallen by 0.55%.
Singapore is 0.90% lower ahead of an expected MAS tightening on Thursday. Kuala Lumpur is down 0.20%, and Jakarta is 0.10% lower. Bangkok has fallen 0.35% and Manila has lost 0.95%. Falling oil prices and soft US markets have seen resources lead Australia lower. The ASX 200 and All Ordinaries fell by 0.55%.
European equity markets will find little solace in the overnight price action and will likely head lower at the open. Sky-high German inflation data will also erode sentiment as ECB tightening fears rise. Perhaps the most important thing to watch for is unconfirmed allegations that Russia has used a chemical weapon in Mariupol. This story has been circulating widely in Asia today across multiple international news outlets. If confirmed as true, European equities will surely come under pressure again as the EU will be forced to ratchet sanctions, potentially oil this time, as a response.
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