Asian stocks fell sharply to reach their lowest this year on Tuesday after comments from some Federal Reserve officials suggested that the U.S. central bank might have to raise its key interest rate higher than previously expected in the current battle against inflation.
Gold sank to a seven-month low as the dollar hit 11-month highs amid a spike in the U.S. benchmark 10-year bond yield to the highest level since 2007. Oil fell for a fourth day on concerns about the demand outlook.
South Korean and Chinese markets were closed for holidays. Hong Kong’s Hang Seng Index tumbled 2.7 percent to 17,331.22 as trading resumed after a long holiday weekend.
China Evergrande Group shares jumped over 28 percent in Hong Kong as trading in the heavily indebted Chinese property giant resumed following a halt last week.
Japanese shares fell sharply amid lingering worries over U.S interest rates staying higher for longer period. Traders also remained on alert for a possible government intervention in currency markets to combat a sustained depreciation in the yen.
The Nikkei 225 Index slumped 1.6 percent to 31,237.94, hitting a four-month low amid concerns over the rise in long-term U.S. yields. The broader Topix Index settled 1.7 percent lower at 2,275.47.
Automakers led losses, with Honda Motor and Toyota Motor falling around 3 percent each after Japanese Finance Minister Shunichi Suzuki repeated a warning against speculative moves in currency markets. Mitsubishi Motors plummeted over 5 percent and Mazda Motor plunged 6 percent.
Resource stocks followed suit, with Inpex and Eneous Holdings plunging 6.5 percent and 5.9 percent, respectively.
Australian markets declined after the Reserve Bank of Australia held interest rates steady for a fourth month but reiterated that further policy tightening might be needed to bring inflation to heel in a “reasonable timeframe.”
The benchmark S&P ASX 200 Index dropped 1.3 percent to 6,943.40, while the broader All Ordinaries Index ended down 1.3 percent at 7,141.
Mining and energy stocks succumbed to selling pressure as commodity prices weakened due to a stronger dollar.
Gold miners Northern Star Resources, Evolution Mining and Perseus lost 4-6 percent, while energy companies Santos and Beach Energy declined 4-5 percent.
Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index finished marginally lower at 11,235.72.
Building materials company Fletcher Building rose about 1 percent after Moody’s Investors Service assigned it an investment grade credit rating.
U.S. stocks ended mixed overnight as rising oil prices and bond yields offset signs of resilience in the U.S. manufacturing sector and investor optimism over lawmakers reaching a deal to avert government shutdown.
The Dow slipped 0.2 percent to hit a four-month low, while the S&P 500 inched up marginally and the tech-heavy Nasdaq Composite rose 0.7 percent.
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