* MSCI Asia-Pacific ex-Japan 0.79% lower
* Shenzhen CSI 300 from China 0.9% lower
* Dollar gains on the euro and the yen, with US yields skyrocketing
* Nasdaq drops 2.4%, confirming correction
SYDNEY / NEW YORK, March 9 (Reuters) – Asian equities fell on Tuesday, with rising bond yields impacting technology stocks and company valuations in China and Korea, and investors faced their fears inflation, as the United States looks set to approve a $ 1.9 trillion package stimulus.
The broader MSCI index for Asia Pacific stocks outside Japan fell 0.79%, while the Korean Kospi fell 1.88%, its fourth consecutive loss session. Japan’s Nikkei reduced previous losses in the session to 0.24% higher.
U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s coronavirus aid package would provide sufficient resources to fuel a “very strong” economic recovery in the US, and noted that “there are tools” to deal with with inflation.
Despite the positive signs, investors remain at odds over whether the stimulus will help global growth recover more quickly from the slowdown in COVID-19 or cause the world’s largest economy to overheat and lead to rampant inflation.
“The chance of seeing more inflation in the economy is significantly increased by the actions of monetary and fiscal policy that we are seeing around the world,” said Goldman Sachs CEO David Solomon at a Sydney conference via webcast.
“There is certainly a reasonable outcome in which inflation accelerates faster than people expect, and that will obviously have an impact on markets and volatility.”
The technology sector and other high-value companies have been highly susceptible to higher rates.
Australian stocks followed overnight gains on Wall Street, with the main S & P / ASX 200 index rising to 1.04% on Tuesday. However, Australian technology stocks fell for the sixth consecutive session, in line with their US peers.
The index returned those gains to be only 0.40% higher in afternoon trading after technology declines and a 10% drop in shares in the Insurance Australia Group before an announcement about the insolvency of financial services provider Greensill Capital.
China’s blue chips fell 1%, while Hong Kong’s Hang Seng advanced 0.9%.
On Wall Street, the Dow advanced while the Nasdaq fell more than 2%, marking a drop of more than 10% since its closing high on February 12 and confirming a correction in the index value.
The Dow Jones Industrial Average rose 0.97%, the S&P 500 lost 0.54% and the Nasdaq Composite fell 2.41%.
The pan-European index STOXX 600 .STOXX rose 2.10% and the stock index of MSCI worldwide fell 0.02%.
“If rates are going up because people are becoming optimistic about what economic growth is like, this is still favorable for stock prices,” said Tom Hainlin, global investment strategist at Ascent Private Wealth Group at US Bank Wealth Management in Minneapolis .
US treasury yields increased as investors continued to set prices with higher inflation and more optimistic outlook for the US economy as it emerged from the coronavirus pandemic.
The 10-year reference yield rose to 1.6029%, from 1.594% on Monday night.
In the foreign exchange market, the dollar index reached a three and a half month high, rising 0.523%, with the euro rising 0.06%, to US $ 1.185.
Oil prices rose on Tuesday, but failed to recover gains on Monday after attacks on oil facilities in Saudi Arabia have pushed prices to a peak since the start of the COVID-19 pandemic.
Brent oil futures rose 33 cents, or 0.51%, to $ 68.57 a barrel. US oil futures were 27 cents, or 0.42% higher, at $ 65.32.
Spot gold added 0.4% to $ 1,688.42 an ounce.
Reporting by Paulina Duran and Matt Scuffham; Editing by Sam Holmes and Christian Schmollingr