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(Add Chinese shares, update levels throughout)
By Koh Gui Qing and Swati Pandey
NEW YORK / SYDNEY, March 5 (Reuters) – Asian stocks slipped to a one-month low on Friday as rising U.S. Treasury yields once again rocked equity investors while pushing the dollar to a low. three-month high, which in turn dragged the Japanese yen.
Energy markets have not been immune to volatility either, with oil prices adding big gains overnight after the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to maintain essentially their supply cuts in April pending a more solid recovery in demand from the Coronavirus pandemic.
Australian stocks fell more than 1%, the average share of Japan’s Nikkei fell 1.6%, and Seoul stocks fell 1.4%. Chinese stocks were in the red with the CSI300 bluechip index at 1.5%.
That sent the MSCI Asia-Pacific equity index outside of Japan to 684.52, the lowest since February 1.
Futures contracts on E-Mini S&P fell 0.5%.
US stocks fell on Thursday after Federal Reserve Chairman Jerome Powell disappointed some investors by failing to indicate that the Fed may step up its long-term bond purchases to maintain long-term interest rates on the decline.
The high-tech Nasdaq Composite fell 2.1%, pulling it down about 10% from its record close on February 12 and placing it in correction territory.
Even though Powell made it clear that the Fed was not close to changing its ultra-loose monetary policy anytime soon, some analysts were still concerned that the rise in Treasury yields could herald higher borrowing costs, thus limiting the fragile US economic recovery.
“The market was apparently looking for Powell to push back the recent surge in yields harder,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank.
“The volatility seen yesterday in the local interest rate markets with a further significant increase in long-term rates and government bond yields once again set the stage for a volatile market today if today’s developments the next day are an indication. “
Bond investors with a bearish view of Treasuries took confidence in Powell’s remarks and sold the notes. The yield on 10-year Treasuries climbed above 1.5% to 1.5727%, but still below a one-year high of 1.614% reached last week.
The yield curve, a measure of economic expectations, steepened as yields rose, with the spread between two-year and 10-year yields widening an additional 6.3 basis points overnight.
Rising Treasury yields supported demand for the dollar. The dollar index jumped to a three-month high of 91.734.
A stronger dollar hampered the yen. On Friday morning, the yen fell to 107.97, the lowest since July 1, although it reduced those losses and was last at 107.85.
The euro was also triggered by a stronger dollar, with the common currency sluggish at $ 1.1960.
Rising yields and the strength of the dollar pushed gold prices down, which fell to a nine-month low as investors sold the precious metal to reduce the opportunity cost of holding the asset. unproductive.
Spot gold slipped 0.2% earlier on Friday to $ 1,692.26 an ounce, trading below $ 1,700 for the first time since June 2020.
Oil prices extended their gains early Friday after rising overnight.
US crude futures rose 17 cents, or 0.3%, to $ 64, remaining below a 13-month high on Thursday. Brent rose 10 cents to $ 66.84 a barrel.
In the cryptocurrency market, bitcoin fell 4% to $ 46,422 on Friday.
(Reporting by Koh Gui Qing in New York and Swati Pandey in Sydney; editing by Sam Holmes and Christian Schmollinger)
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