Asia stocks slide again as bond-yield drop stokes worry

Japan's Nikkei fell 1.6 per cent, while E-Mini futures for the S&P 500 lost 0.4 per cent.
Japan's Nikkei fell 1.6 per cent, while E-Mini futures for the S&P 500 lost 0.4 per cent.PHOTO: REUTERS

SYDNEY (BLOOMBERG) - Stocks declined again across much of Asia on Thursday (March 28) as the precipitous decline in developed-market sovereign bond yields continued to unnerve investors about the economic outlook.

Yields on 10-year Treasuries fell about two basis points to hit a fresh 15-month low of 2.35 per cent on Thursday in Asia, and Australian ones recorded the lowest on record, while Japan's dropped to the lowest since August 2016.

Japanese shares led losses in the region, sliding about 1.7 per cent. Losses were more modest in South Korea and China, while India and Australia saw gains and Hong Kong snuffed out early declines. European equity futures were little changed. US futures fell after the S&P 500 Index dropped on Wednesday. The yen headed higher as haven demand emerged.

Britain's pound traded at the weaker end of its recent range after the U.K. Parliament rejected eight possible options for a new Brexit strategy, leaving the Brexit outlook all the muddier. Elsewhere, rates on benchmark German Bunds sank further below zero after European Central Bank President Mario Draghi said an accommodative stance is still needed.

Recent data showing weakness in US housing and consumer sentiment fed into the growth concerns that have helped stoke the bond rally over the past week. Federal funds futures are now pricing in more than a quarter point of easing by the end of 2019.

"We are worried about the short term because the Fed is as dovish as they can be in the short term," Chris Harvey, head of equity strategy at Wells Fargo in New York, told Bloomberg TV. "Interest rates are coming down throughout the globe, fears of recession are starting to go higher. We don't think those fears are founded - but you have to acknowledge that that's going to weigh on markets in the short term.''

Japan's Topix index fell 1.7 per cent at the 3 pm. close in Tokyo. South Korea's Kospi index retreated 0.8 per cent, Hong Kong's Hang Seng Index was flat while the Shanghai Composite fell 0.8 per cent.

Australia's S&P/ASX 200 Index rose 0.7 pe cent.

The S&P 500 Index futures dipped 0.4 per cent after the underlying benchmark fell 0.5 per cent on Wednesday.

The yen rose 0.4 per cent to 110.09 per US dollar.

The offshore yuan traded flat at 6.7360 per dollar.

The Bloomberg Dollar Spot Index rose 0.1 per cent.

The euro bought US$1.1257, up 0.1 per cent.

The British pound was steady at US$1.3192.