Equities Decline on Rate Cut Qualms – Asia Market Wrap

As a result of hotter-than-expected US inflation statistics, Asian markets followed Wall Street’s slide, and the yen strengthened after its decline on Tuesday prompted a warning from Japan.

Contracts for European equities fell, while those on their US counterparts saw little movement. Shares fell in South Korea, Japan, and Australia. In contrast, Chinese stocks listed in Hong Kong reversed an early drop as trading resumed after the Lunar New Year holiday, with investors focusing on what more Beijing can do stem the rout.

The yen rose 0.3% to 150.42 per dollar after Masato Kanda, Japan’s top currency official, warned that recent swings have been quick and that authorities are prepared to take action if necessary. Finance Minister Shunichi Suzuki later echoed Kanda’s views.

Japan’s 10-year government bond yield climbed to its highest level since December, erasing the last remnants of a global bond rally that began in December with the hope that the Fed had finally shifted to favour an easing. Traders reduced their bets on an early Federal Reserve interest-rate cut, and Treasury yields stabilised after soaring on Tuesday.