Asia report: Most markets fall as investors watch US Treasury yields

Most markets in Asia finished in the red on Thursday, following a disappointing session on Wall Street as investors there reacted to another fall in the 10-year US Treasury yield.

In Japan, the Nikkei 225 was down 1.61% at 21,033.76, as the yen strengthened 0.14% against the dollar to last trade at JPY 110.35.

Automation specialist Fanuc was one of the leading losers on the benchmark index, falling 1.32% by end-of-play.

The broader Topix index was down 1.66% in Tokyo, settling at 1,582.85.

On the mainland, the Shanghai Composite was 0.92% lower at 2,994.94, and the smaller, technology-heavy Shenzhen Composite slid 0.91% to 1,639.72.

South Korea’s Kospi was off 0.82% at 2,128.10, while the Hang Seng Index in Hong Kong managed gains of 0.16% to 28,775.21.

Hong Kong-listed shares in China Construction Bank were on the back foot, falling 1.16% after the company reported its first fall in quarterly profit in four years.

At the other end of the bourse was battered telecoms technology manufacturer ZTE, which saw its Hong Kong shares surge 9.36% after it released forecasts for a much-improved first quarter profit.

The company has struggled in the last year, after US sanctions forced it to halt most of its operations for four months in 2018.

Over in Seoul, the blue-chip technology stocks were at the wrong end of the benchmark index, with Samsung Electronics down 1.1% and SK Hynix falling 1.5%.

Sentiment was weak in Asia as the region’s markets opened on Thursday, following a poor showing on Wall Street overnight.

That performance came after the 10-year US Treasury yield fell to its lowest level since December 2017, eventually reaching 2.3611% at the end of Wednesday’s hours stateside.

Market watchers were keeping an eye on the Treasury numbers, after the 10-year yield slipped below the three-month yield for the first time in 12 years earlier in the week.

That phenomenon - a so-called ‘inverted yield curve’ - is seen by many as an early indication of a potential economic recession.

“Investors are having a hard time deciding whether the drop in yields is positive or negative for stocks,” noted BK Asset Management director of foreign exchange strategy Kathy Lien.

She said that on the one hand, lower rates were good for borrowing, but on the other, the reason the yield curve had inverted was because of falling interest rates themselves.

Oil prices were lower as the region went to bed, with Brent crude last down 1.19% at $67.03 per barrel, and West Texas Intermediate losing 1.31% to $58.64.

In Australia, the S&P/ASX 200 added 0.65% to close at 6,176.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 once again reached a record high, rising 0.7% to 9,766.19.

The down under dollars were a mixed picture, with the Aussie last 0.01% weaker against the greenback at AUD 1.4116, while the Kiwi strengthened 0.06% on the same currency to NZD 1.4703.