HONG KONG- Asian shares were down while the US dollar held strong on Tuesday, as Treasury yields spiked to a three year high ahead of US inflation data which could foreshadow even more aggressive interest rate hikes from the Federal Reserve.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3 percent, after US stocks ended the previous session with mild losses.
Australian shares were down 0.65 percent, while Japan’s Nikkei stock index slid 1.5 percent.
Higher US bond yields were supporting the dollar, with the US currency’s index measure against six peers moving back over 100 to test last week’s near-two year high.
The Japanese currency bore the brunt of the losses against the greenback, which rose to 125.77 yen overnight, its highest since June 2015.
The yen has been under the gun over recent months as the Bank of Japan has committed to ultra easy policy even as many other major central banks, led by the Fed, have embarked on tightening monetary conditions.
The euro was buffeted by politics, unable to hold onto gains from its mini-relief rally on Monday after French leader Emmanuel Macron beat far-right challenger Marine Le Pen in the first round of presidential voting.
It was last steady at $1.087.
“U.S stocks fell on Monday as investors grew increasingly concerned a three-year high in the benchmark US 10-year Treasury yield would start to slow the economy, and looked ahead to the upcoming earnings season for signs of what impact inflation is having on corporate profits,” Ord Minnett research analysts wrote to clients on Tuesday.
China’s markets gained ground as signs emerged that some of the strict restrictions were starting to ease across the country’s financial capital.
World markets have been hit hard in the past few months on worries the Ukraine war, Fed’s tightening and China’s tough new COVID-19 restrictions could set back global growth.
