Global Market Today: Asian shares decline, Treasury yields hold gains

Synopsis

Asian stocks mirrored Wall Street's decline as persistent inflation concerns drove Treasury yields to multi-year highs. Rising bond yields globally are raising questions about equity valuations, with investors now scrutinizing Nvidia's earnings amid concerns the AI rally may have accelerated too quickly.

Asian stocks followed Wall Street benchmarks lower as mounting inflation concerns extended a selloff in Treasuries, sending yields to multi-year highs.

Shares were lower in Australia, Japan and South Korea. That set the broader MSCI Asia Pacific Index up for a fourth consecutive day of decline as rising bond yields around the world put a question mark on valuations. Equity-index futures for US stocks edged lower in early Asian trade.

With oil holding above $100 and little sign of an easing in the Iran conflict, yields on 30-year Treasuries on Tuesday hit levels last seen in 2007 on concern elevated energy costs may push the Federal Reserve toward a hike rather than a cut. Treasuries were steady in early Wednesday trading.

A gauge of the dollar closed at its highest in six weeks. Gold, a non yielding asset, held its losses from the prior session, trading under $4,500 an ounce. Chip shares erased earlier losses in the US session, leaving the Philadelphia Stock Exchange Semiconductor Index, or SOX, little changed.

Global stocks have retreated for three straight days after investors spent weeks brushing aside concerns over the war in the Middle East on optimism that artificial intelligence spending would continue to fuel corporate earnings growth. Attention is now turning to Nvidia Corp.’s earnings on Wednesday, with investors increasingly questioning whether the AI-driven rally has run too far, too fast.

“The issue of rising bond yields is still something which could create problems for today’s expensive stock market,” said Matt Maley at Miller Tabak.

The S&P 500 fell 0.7% and the Nasdaq 100 Index dropped 0.6% as rising yields, hot US inflation numbers and elevated oil prices curb investors’ appetite.

Treasury yields continued their ascent Tuesday, with the 30-year benchmark approaching 5.20% and the 10-year rising past 4.65%. Bond markets across Europe and Japan also fell Tuesday.

Yields on government bonds have surged globally in recent weeks as a jump in energy prices caused by the Iran war adds to inflation fears, pushing traders to bet the Federal Reserve will hike interest rates as soon as this year. Mounting deficits are also prompting investors to demand greater compensation to own longer-maturity debt.

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