NEW YORK, March 4 (Reuters) – Asian equities were released on Friday as U.S. Treasury yields again boosted equity investors as they raised the dollar to a three-month high, which , in turn, dragged the Japanese yen to a minimum of eight months.
Volatility in energy markets was also not spared, as oil prices rose more than 5% overnight to a one-year high after OPEC and its allies agreed to keep production unchanged. in April, as the recovery in demand from the coronavirus pandemic was still fragile.
Earlier on Friday, Australian shares fell 1%, the Japanese average Nikkei shares lost 0.7%, Seoul shares fell 0.24% and future E-Mini S&P down 0.04%.
US equities had fallen sharply on Thursday after Federal Reserve Chairman Jerome Powell disappointed some investors by not indicating that the Fed could step up long-term bond purchases to maintain long-term interest rates.
The Nasdaq Composite, which has been technologically powerful, fell 2.1%, dropping it by about 10% from its record high on February 12 and putting it in correction territory.
While Powell made it clear that the Fed was not about to change its ultra-weak monetary policy stance soon, some analysts were still concerned about rising Treasury yields that could herald higher debt costs, thus limiting the fragile American economic recovery.
“The US dollar has gained 0.8%, and there is the holy trinity of market fears: rising real rates, rising expectations of rate hikes and a stronger US dollar” , said Chris Weston, head of research at Pepperstone Markets Ltd, a forex broker, in Australia.
Bond investors with a bearish view of Treasuries worried about Powell’s statements and sold the notes. The ten-year Treasury yield rose above 1.5% to 1.5727%, but still below a one-year high of 1.614% last week.
The yield curve, a measure of economic expectations, intensified as yields rose, with a gap between two- and ten-year yields widening by another 6.3 basis points overnight.
Rising Treasury yields strengthened dollar demand. The dollar index jumped 0.61% against a basket of major currencies to 91,651, in view of a three-month high of 91,663.
A stronger dollar slowed the yen. Earlier on Friday, the yen was soft at 107.95, a level not seen since July 1st.
The euro was also triggered by a firmer dollar, with a slow common currency at $ 1.19665.
Rising yields and the strength of the dollar brought down gold prices, which plunged to nine-month lows as investors sold the precious metal to reduce the opportunity cost of maintaining assets. without yields.
Spot gold fell another 0.2% early Friday to $ 1,694.0600 an ounce, trading below $ 1,700 for the first time since June 2020.
Oil prices, on the other hand, rose gains early Friday after rising overnight.
U.S. crude futures rose 0.85% to $ 64.38 a barrel, after climbing the January 64, 2020 high of $ 64.86 overnight. Analysts said OPEC’s decision not to increase production in April, as many had hoped, demonstrated what it is willing to do to deplete inventory and keep prices high.
In the cryptocurrency market, Bitcoin reduced overnight losses and fell 3.8%, to $ 48,473, early Friday.
Koh Gui Qing Reports; Edited by Sam Holmes