Surging Treasury Yields and Dollar Hit Asian Markets

09 October, 2018, 02:39 | Author: Eric Barnett
  • Tech shares led declines in Asia earlier after Bloomberg reported that China infiltrated U.S. companies with hardware hacks

"Good news for economy is bad news for equity investors right now", said Michael Geraghty, equity strategist at Cornerstone Capital Group's in NY.

USA futures pointed to 0.4% opening losses for both the S&P 500 and the Dow Jones Industrial Average, after the latter benchmark hit a fresh record Wednesday.

The 10-year bond yield pushed above 3.21 percent as the unemployment rate fell to a 48-year low, though the number of jobs created fell short of estimates.

Germany's 10-year bond yield, the benchmark for the region, hit a 4-1/2 month high of 0.55 percent before settling at around 0.54 percent, still up five basis points on the day.

The latest Reuters poll sees 185,000 new jobs and average hourly earnings increasing 0.3 per cent in September after leaping 0.4 per cent in August.

A 5.4-per-cent jump in Aurora Cannabis Inc. led the health care sector higher.

In commodities, Brent crude oil was down 0.2% at $86.15 a barrel and gold was up 0.1% at $1,198.95 a troy ounce.

New data showed that job growth in the U.S. picked up considerably in September to reach a peak not seen in seven months, sending a signal that the USA economy still looks fairly robust. Markets opened flat to 0.1% lower today. "I think it is Trump versus the bond market and this playbook's got a long way to go".

The 30-year Treasury bond reached a four-year high of 3.424 per cent, up 7 basis points from late Thursday.

Similarly, the yield on the two-year Treasury note was last 2.882%, up from 2.860% Wednesday, when it hit its highest point in more than a decade.

Foreign investors remained net sellers for a third day pulling out Rs 2,760.63 crore from stock markets.

On the economic front, USA private sector employment increased by 230,000 jobs from August to September, according to research institute ADP's National Employment Report on Wednesday.

The Dow .dji rose 0.2 percent, while the S&P 500 .spx gained 0.07 percent and the Nasdaq .ixic 0.32 percent. The euro was up 0.06 percent to $1.152. The Japanese yen strengthened 0.55 percent versus the greenback at 113.92 per dollar.

Earlier, London, Paris and Frankfurt all lost at least 1%.

In oil, Crude futures settled up for the week as USA unemployment data eased concerns about demand in the world's top oil consumer and ahead of US sanctions on Iranian oil exports.

USA crude CLcv1 oil futures rose 0.7 percent to $74.85 a barrel and Brent crude LCOc1 futures gained 0.5 percent to $85.00 a barrel.

"The likely reason for this is that the USA economy is strong and isn't really showing many signs of weakness, and as a bonus, prices have remained low and more importantly, unexplained", Giddis added. Prices ended lower yesterday after a report U.S. domestic crude inventories rose sharply last week and Saudi Arabia and Russian Federation said they would raise output to compensate for expected Iran exports declines.

The combination of rising oil prices, borrowing costs and a climbing US dollar have also been rocking emerging markets, which tend to be vulnerable to all three.

MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.7 percent in response, with South Korea, the Philippines, Indonesia and Taiwan all down.



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