Asian shares extend global losses after Wall Street’s rout

By , on February 4, 2018

European stocks were flat after Asian markets finished mostly higher on Thursday in quiet post-Christmas holiday trading. Strong economic data from the region and in the U.S. boosted investor confidence in some markets. (Shutterstock)
Higher bond yields make it more expensive for companies to borrow (Shutterstock)

HONG KONG — Asian shares opened sharply lower on Monday, extending global stock losses after Wall Street’s big selloff as investor anxiety grows over rising bond yields and disappointing quarterly earnings.

KEEPING SCORE: Japan’s benchmark Nikkei 225 tumbled 2.4 per cent to 22,709.22 and South Korea’s Kospi shed 1.7 per cent to 2,483.71. Hong Kong’s Hang Seng index sank 1.9 per cent to 31,975.80 and the Shanghai Composite in mainland China dipped 0.4 per cent to 3,448.60. Australia’s S&P/ASX 200 lost 1.7 per cent to 6,019.40.

SELLOFF: Market jitters spread after the U.S. stock market had its worst day in two years on Friday, fueled by worries about inflation and rising Treasury yields. Higher bond yields make it more expensive for companies to borrow and also bonds more attractive to investors than stocks. The latest U.S. jobs report showed job growth above expectations, stoking concerns that the Federal Reserve will raise its key interest rate faster than expected in response to higher inflation.

MARKET INSIGHT: “The U.S. share market is long overdue a decent correction. This now appears to be unfolding and may have further to go as higher inflation, a slightly more aggressive Fed and higher bond yields are factored in,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney. But he predicted that “the pullback in shares should be limited in depth and duration to a correction” of about 10 per cent.

WALL STREET: The S&P 500 fell 2.1 per cent to close at 2,762.13. The Dow Jones industrial average lost 2.5 per cent to 25,520.96 and the Nasdaq slid 2 per cent to 7,240.95.

ENERGY: Oil futures extended losses. Benchmark U.S. crude slid 61 cents to $64.84 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 35 cents to settle at $65.45 a barrel on Friday. Brent crude, used to price international oils, fell 62 cents to $67.96 a barrel in London.

CURRENCIES: The dollar weakened to 109.94 yen from 110.14 yen in late trading Friday. The euro weakened to $1.2452 from $1.2458.