Asian Stock Market: Powell-packed Treasury yields defy China’s try to placate bears

Asian equities drift lower as reflation fears gain momentum despite Fed Chair Powell’s rejection and China’s attempt to soothe the pains. Also likely to heavy the mood could be the fresh tussle over the coronavirus (COVID-19) vaccine between Italy and Australia, as well as recently eased geopolitical tension from New Zealand.

Against this backdrop, the MSCI index of Asia-Pacific shares outside Japan drops over half a percent whereas Japan’s Nikkei 225 prints 0.65% intraday loss during early Friday. It’s worth mentioning that chatters over a two-week extension to Tokyo’s virus-led emergency exert an additional burden on the Japanese shares.

Australia’s ASX 200 and NZX 50 lack major positives to defy market sentiment and hence decline 0.80% and 0.65% by press time. Further, China’s main stock index, CSI 300, teases a technical correction, with investors worried about rising bond yields and tightening liquidity. 

Elsewhere, Hong Kong’s Hang Seng is down 0.60% and so do South Korea’s KOSPI. However, Indonesia’s IDX Composite prints the least losses as their central bank stays ready for market intervention if needed. Furthermore, India’s BSE Sensex follows the likes of China and Australia amid a broad risk-off mood whereas S&P 500 Futures catch a breather around the one-month low with a -0.10% intraday downtick.

US 10-year Treasury yields refresh the highest level since February 2020 while rising to 1.5780%.

As bond bears have already rejected the Fed and the ECB policymakers’ efforts, US employment data, mainly the Nonfarm Payrolls (NFP), will be the key to watch.

Read: Nonfarm Payrolls Preview: Dollar booster? Three expectation downers pave way for upside surprise