{"id":171978,"date":"2023-03-07T13:05:48","date_gmt":"2023-03-07T13:05:48","guid":{"rendered":"https:\/\/precoinnews.com\/?p=171978"},"modified":"2023-03-07T13:05:48","modified_gmt":"2023-03-07T13:05:48","slug":"asian-stocks-rally-sputters-as-china-pulls-back-higher-u-s-yields-weigh","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/asian-stocks-rally-sputters-as-china-pulls-back-higher-u-s-yields-weigh\/","title":{"rendered":"Asian stocks rally sputters as China pulls back, higher U.S. yields weigh"},"content":{"rendered":"
SYDNEY (Reuters) – A rally in Asian shares sputtered on Thursday, pressured by a pullback in Chinese stocks and higher U.S. yields amid fears that global central banks would keep raising interest rates to combat sticky inflation.<\/p> MSCI\u2019s broadest index of Asia-Pacific shares outside Japan lost 0.3%, reversing some of the 2.1% gain in the previous session – the index\u2019s best day in two months. Japan\u2019s Nikkei, on the other hand, eased 0.2%.<\/p>\n Hong Kong\u2019s Hang Seng Index retreated 1.0%, after registering the biggest daily gain of 4.2% in nearly three months the previous day, buoyed by unexpectedly robust readings from China PMI surveys.<\/p>\n Investors\u2019 enthusiasm has faded somewhat over China\u2019s economic reopening after Beijing dismantled its strict COVID-19 controls in December, as analysts look for more evidence to gauge the pace of economic recovery.<\/p>\n U.S. futures erased earlier gains, with the S&P 500 stock futures falling 0.5% and Nasdaq futures down 0.7%.<\/p>\n Tesla shares slumped 5.5% in after-hour trading, after the Tesla Investor Day failed to excite investors. The company will cut vehicle assembly costs by half in future generations of cars, engineers told investors.<\/p>\n \u201cFinancial markets are caught between the two narratives of a softer landing, helped by China\u2019s reopening, and sticky inflation keeping policy rates higher for longer,\u201d said Chris Turner, global head of markets at ING.<\/p>\n \u201cThat will probably keep bond markets on the back foot and FX markets volatile in ranges.\u201d<\/p>\n Overnight, both bonds and shares took a battering, as inflation indicators from Germany and the United States reinforced expectations that interest rates would go higher and stay there for longer.<\/p>\n Data overnight showed no let-up in stubborn price pressures in Germany, after both Spain and France posted unexpected inflation rises on Tuesday. Germany\u2019s 2-year government bond yield rose to its highest since October 2008.<\/p>\n In the United States, manufacturing activity contracted for a fourth straight month in February, but a gauge of prices for raw materials increased last month, stoking concerns that inflation would remain stubborn.<\/p>\n \u201cThe PMI manufacturing data provides a mixed message for global risk appetite, with improving growth trends positive, but lower output prices stalling out,\u201d said Alan Ruskin, macro strategist at Deutsche Bank.<\/p>\n \u201cIn general, developed markets tend to have a worse balance than emerging markets, in so much as growth is weaker and inflation more sticky.\u201d<\/p>\n On Thursday, the benchmark 10-year Treasury yields hit a fresh four-month high of 4.0160%, after hitting 4% overnight. The two-year yields also advanced to 4.9080%, a fresh 15-year high.<\/p>\n Investors still mostly foresee the Fed raising rates by 25 basis points at its next meeting later this month, but expectations of a larger 50 basis points hike have increased. The probability that the Fed\u2019s policy rate, currently set in the 4.5% to 4.75% range, could peak above 5.5% range stood at 53%, compared with 41.5% on Feb. 28, according to CME Fed tool.<\/p>\n Minneapolis Fed President Neel Kashkari said he was inclined \u201cto push up my policy path\u201d after a recent government report showed the Fed\u2019s preferred inflation index accelerated in January to a 5.4% annual rate, more than double the Fed\u2019s 2% target and slightly faster than the month before.<\/p>\n In the currency markets, the U.S. dollar index, measuring the greenback\u2019s value against a basket of major peers, gained 0.2% to 104.6.<\/p>\n The euro lost 0.2% to $1.0646, reversing some of a 0.8% gain overnight, with hotter-than-expected German inflation adding to pressure on the European Central Bank to raise rates.<\/p>\n In the crypto world, shares in Silvergate Capital plunged by as much as 28% after the cryptocurrency-focused bank said it was delaying its annual report and was evaluating its ability to operate as a going concern.<\/p>\n Oil prices were largely steady on Thursday, having risen by 1% the previous day due to optimism over China\u2019s recovery. U.S. crude held at $77.67 a barrel. Brent crude was largely unchanged at $84.34 per barrel.<\/p>\n Gold was slightly lower. Spot gold was traded at $1832.53 per ounce. [GOL\/]<\/p>\n