Stocks slump

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HONG KONG- Asian stocks slid to 11-month lows on Wednesday, US futures dropped and the dollar surged as Treasury yields spiked back toward peaks on fears that US interest rates will stay high.

A rebound in US home sales was the latest trigger for concern in the bond market. Corporate earnings have also been mixed. Alphabet shares logged their worst session since March 2020 overnight, dropping 9.5 percent  as investors were disappointed with stalling growth in its cloud division.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 percent . Japan’s Nikkei fell 2 percent . Alphabet shares slid another 2 percent  after hours and pulled Nasdaq futures down by nearly 1 percent .

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The benchmark 10-year Treasury yield a bedrock for pricing risk-taking across financial markets, jumped 11 basis points (bps) overnight and traded at 4.96 percent  on Thursday.

“There is no anchor in US treasuries,” said Ben Luk, Senior Multi Asset Strategist at State Street Global Markets.

“If (the 10-year yield) doesn’t stay below 5 percent , then I think it’s still going to be a very choppy market for both US and Asia,” he said.

“Once you have more stable treasury environment, you will have a clearer earnings revision story,” he added, noting markets dominated by tech firms, which rely heavily on financing, will be vulnerable to higher rates due to borrowing costs.

Shares in Facebook parent Meta fell 4 percent  on Wednesday and another 3 percent  in after-hours trade after publishing results showing better-than-expected revenue but a cloudy outlook, with expenses seen topping Wall Street estimates.

Australian shares fell to a one-year low, as stronger-than-expected third-quarter inflation data raised bets that the central bank might raise rates next month.

The S&P/ASX 200 index retreated 0.7 percent  to 6,854.20 in early trade, hitting its lowest level since Oct. 31, 2022.

In the currency markets, the dollar index hit a two-week high of 106.77.

The yen weakened past 150 per dollar, a level that has put traders on guard for intervention to support the Japanese currency. By 0300 GMT the yen was trading at a one-year low of 150.43 per dollar.

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