Global Stocks Dip as US Fiscal Worries and Weak Japan Bond Demand Weigh on Markets – Asia Market Wrap

US and European stock-index futures edged lower and Treasuries halted a three-day rally amid lingering concern about the fiscal health of the US economy.

Asian shares erased their earlier gains with stocks in Hong Kong among the region’s biggest decliners. Longer maturities led Treasury losses while a 40-year auction in Japan drew the weakest demand since July. South Korean chip stocks rose before earnings from Nvidia due later Wednesday.

Investors have remained wary about the fiscal health of the US economy after President Donald Trump unleashed his tariff war and pushed for tax cuts, which raised concerns about the country’s burgeoning deficit. The Federal Reserve has reiterated it’s waiting to gather more evidence before cutting interest rates, while the “Sell America” trend has hurt the dollar, with a gauge of the currency losing almost 7% this year.

The decline in demand at Japan’s 40-year auction risks fueling further volatility in global debt markets. The nation’s 30-year yield jumped 10 basis points following the sale, while the yen trimmed its decline.

Japan’s debt sale came at a time when long-term borrowing costs have also surged in other major economies, including the US. Japanese yields, particularly in the super-long part of the curve, have been rising as the Bank of Japan scales back its bond purchases, while life insurers are failing to fill in that gap.