Stocks slide, US yields climb amid hawkish Fed, China tensions
U.S. 10-year Treasury yields climbed to a fresh four-month high in Tokyo trading, and the dollar extended its rise against major peers. Japan's Nikkei share average slumped more than 1%, continuing its retreat from 33-year highs.
Hong Kong's Hang Seng fell 0.9%, while mainland blue chips edged 0.2% lower. Australia's stock benchmark slid 1% and Taiwan shares retreated 0.7%. MSCI's broadest index of Asia-Pacific shares dropped 0.7%, after a 0.4% slide for the world index on Wednesday.
U.S. E-mini stock futures pointed to a 0.1% lower restart for the S&P 500, following its overnight 0.2% decline. While almost all Fed officials agreed to hold interest rates steady last month, minutes of the meeting released on Wednesday showed the vast majority expected policy would eventually need to tighten further.
Money market traders place 85% odds on a quarter point hike on July 26, and about a 50/50 chance of another by November. Meanwhile, U.S. Treasury Secretary Janet Yellen begins a trip to China just as Beijing restricted exports on metals used in semiconductors, adding that the controls were «just a start.» «Sentiment has soured for equity bulls as Sino-U.S.
relations take another step backwards and investors adjusted to the fact that the Fed remains more hawkish than hoped,» said Matt Simpson, a market analyst at City Index. «The Fed's decision to pause was not actually unanimous and most members are up for further hikes, so this could cap upside over the near-term,» although the scope of equity declines so far suggests it could be «more of a bump in the road as opposed to blood on the streets,» he added. Ten-year Treasury yields climbed as high as 3.957% in Tokyo trading, after surging some 9 basis points overnight.
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