A currency trader speaks on the phone while monitoring exchange rates in a trading room at KEB Hana Bank in Seoul on March 9, 2020.
JUNG YEON-JE | AFP via Getty Images
SINGAPORE – Asia-Pacific markets fell on Friday, with investor sentiment becoming more cautious due to new concerns about inflation expectations.
Australian stocks plummeted after the market opened, with the ASX 200 benchmark dropping 0.58% – the index retraced some of its previous losses of more than 1%. Most sectors fell: the energy and materials sectors fell 2.32% and 1.07%, respectively, while the most significant finance sub-index lost about 0.1%.
The Nikkei 225 in Japan fell 0.6%, while the Topix index fell 0.32%.
South Korea’s Kospi fell 0.84% and Kosdaq fell 0.62% with the sale of technology names. Shares of Samsung Electronics fell 0.84%, SK Hynix fell 2.11% and LG Electronics lost 1.29%.
The stock market on Wall Street struggled overnight, where tech stocks were hit hard, while the Dow and S&P 500 also fell. This weakness in stocks was reflected by an increase in bond yields.
Yields move in the opposite direction to prices. The increase in bond yields usually indicates confidence in the economic recovery and fears about inflation, which may make high-growth stocks appear less attractive to investors.
“It was a mixed session for risky assets overnight, with bond yields rising following the FOMC meeting,” analysts at ANZ Research wrote in a note on Friday morning. “The Fed will wait for evidence of stronger data before raising its forecast for federal funds. This has seen market measures of inflation expectations rise, raising bond yields.”
Coins and oil
In the foreign exchange market, the dollar traded almost stable at 91.853 against a basket from its peers. Overnight, the dollar erased most of its losses seen after the Fed’s decision on Wednesday.
“The Federal Reserve has no plans to raise interest rates until 2023, but the recovery of the dollar and the increase in Treasury yields tell us that investors continue to be attracted by the positive outlook for the economy,” said Kathy Lien, director- foreign exchange strategy manager at BK Asset Management said in a Thursday note.
Lien explained that the Fed will not be able to keep the dollar low “because the launch of vaccines and stimulus checks will provide a strong recovery in the second quarter and the second half”.
The Japanese yen changed hands at 109.02 per dollar, weakening from an earlier level of around 108.87. The Bank of Japan is due to conclude its two-day monetary policy meeting on Friday and reports have suggested that the central bank should expand a band in which it allows long-term interest rates to revolve around the 0% target.
The Australian dollar fell 0.17% to $ 0.7743.
Oil prices fell on Friday during the Asian trading session. US crude fell 0.55% to $ 59.67 a barrel, while the global benchmark Brent fell 0.51% to $ 62.96.
Overnight, prices plunged close to 7% or more for US and Brent oil futures.
“Oil prices have fallen as concerns about weaker demand in the short term have deepened,” ANZ analysts wrote. “After recent updates from the IEA, EIA and OPEC, the growth in demand for oil is likely to remain well below previously optimistic forecasts. This is amid mixed economic data.”
The stronger US dollar also probably weighed on investor appetite in the sector.