BANGKOK, Thailand (AP) — On Friday, Asian equities were generally lower after stocks on Wall Street pulled back from recent record highs as bond yields fell and investors became more cautious. The Nikkei 225 index in Tokyo fell over 2%. Seoul, Sydney, and Shanghai stocks all sank, while Hong Kong stocks climbed. The yield on the 10-year Treasury note TMUBMUSD10Y, 1.333 percent jumped to 1.34 percent as U.S. futures fell ES00, +0.08 percent, YM00, +0.20 percent, and NQ00, -0.05 percent. It dipped to 1.30 percent on Thursday, its lowest level since February. It was trading at 1.74 percent recently.
In recent weeks, traders have shifted money into bonds, lowering the benchmark yield, which is used to calculate rates on mortgages and other types of loans. The Nikkei 225 NIK, -0.63 percent in Tokyo fell 1.7 percent to 27,633.10, while the Kospi 180721, -0.96 percent in South Korea fell 1.2 percent to 3,211.05. To combat new outbreaks of the coronavirus, authorities in both nations have reinforced pandemic measures. Japanese Prime Minister Yoshihide Suga has declared a state of emergency in Tokyo, which will last until the end of the Olympics on August 8. Investors are assessing the risk of COVID-19 versions stifling a rebound in trade and tourism. Following a state of emergency declared in Tokyo to combat growing coronavirus infections, fans have been barred from attending the Olympics. The S&P/ASX 200 index in Sydney XJO, -0.93 percent down 1.3 percent to 7,245.10, while the Shanghai Composite index SHCOMP, -0.07 percent fell 0.4 percent to 3,512.84. In India and Taiwan, stocks declined as well, but in Hong Kong, the Hang Seng index surged 0.7 percent to 27,330.71. The S&P 500 SPX, -0.86 percent sank 0.9 percent to 4,320.82 on Thursday, pressured down by a broad sell-off led by technology, financial, industrial, and communication industries. The Dow Jones Industrial Average DJIA, -0.75% dropped 0.7 percent to 34,421.93 points. The Nasdaq Composite COMP, -0.72 percent fell 0.7 percent to 14,559.78, snapping a three-day run of closing highs. Stocks of smaller companies also declined. The Russell 2000 index RUT, -0.94 percent fell 0.9 percent to 2,231.68 points. Investors’ forecasts for inflation and economic growth tend to alter longer-term bond yields. Both are still extremely robust and have risen significantly in recent years. As the economy goes past the initial catapult phase of its recovery from the pandemic, Wall Street increasingly feels they’ve already peaked. Investors swiftly reversed bets that long-term bond yields would continue to rise as the economy continued its rapid recovery, which contributed to the dramatic decline in long-term bond yields. The industrial and services sectors are still increasing, although at a slower pace than in prior months and below economists’ estimates, according to two recent surveys. Even though the economy and job market appear to be recovering from the coronavirus recession, the Labor Department reported on Thursday that the number of Americans filing for unemployment benefits increased marginally last week. Investors are becoming increasingly concerned about possible measures by central banks, particularly the Federal Reserve of the United States, to reduce extravagant support for markets that collapsed at the start of the pandemic. Officials are getting closer to lowering bond purchases, according to minutes from the Fed’s June meeting, though most analysts don’t expect a reduction until late this year. At that meeting, policymakers announced that interest rates would be raised as soon as 2023, a year sooner than originally anticipated. The S&P 500’s greatest loses were railroad stocks. Thursday, following a report that the Biden administration planned to sign an executive order next week instructing authorities to take action against railroad and ocean shipping industry consolidation and anticompetitive pricing. The Wall Street Journal cited an unnamed source familiar with the matter in their report. The S&P 500’s largest loser was Kansas City Southern KSU, -7.87 percent, which fell 7.9 percent. Norfolk Southern NSC, -7.16 percent was down 7.2 percent, CSX CSX, -6.16 percent was down 6.2 percent, and Union Pacific UNP, -4.38 percent was down 4.4 percent. Investors will begin paying attention to corporate profits next week, when major banks such as JPMorgan Chase JPM, -1.73 percent, Goldman Sachs GS, -2.37 percent, and Bank of America BAC, -2.44 percent publish their results. Because banks are sometimes used as a proxy for the entire economy, investors will be attentively examining the reports and listening to what banks have to say about lending and expenditure as the recovery progresses./n
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