International stocks fell on Friday, following falling US indices as the bond yield helped dampen investors ’appetite for high-value stocks.
However, U.S. Treasury notes raised the price, recovering some of the losses from the previous session, and futures suggested that stocks in New York could stabilize or gain slightly in Friday’s trading.
Investors said the market has been reviewing US Federal Reserve’s prospects for rising interest rates, despite assurances from President Jerome Powell that the central bank will not raise rates soon.
“What has happened in recent weeks is that markets have had to reproduce expectations of Federal Reserve rate hikes,” Dwyfor Evans, head of macro-strategy for the Asia-Pacific region told State Street Global Markets in Hong Kong.
He said the recovery in bond yields would have significant effects in areas such as corporate lending and mortgage rates. “That’s why stocks will be under pressure here, because rising returns will have some impact on the real [economy] and profits may have to slow down, ”Evans said.