Asia markets slump amid rising yield worries; Dollar climbs

  • Most markets in Asia fell on Wednesday while Australia and New Zealand were shut for Anzac day public holiday.
  • Japan's Nikkei 225 declined about 0.3 percent and South Korea's Kospi index fell around 0.6 percent.
  • The dollar index traded at levels near 90.981 in the afternoon.
  • Oil prices were down a notch — U.S. crude was lower by 0.13 percent to $67.61 and global benchmark Brent declined 0.12 percent to $73.77 a barrel.

Markets in Asia traded lower on Wednesday, following an overnight drop in U.S. stocks as investors worried about rising interest rates and the outlook of the economy.

Japan's Nikkei 225 fell 62.80 points, or 0.28 percent, to 22,215.32 while the Topix index declined 2.02 points, or 0.11 percent, to 1,767.73.

Shares of Takeda Pharmaceutical dropped 7.03 percent after news emerged that the company increased its acquisition offer for London-listed drugmaker Shire, to about 46 billion pounds ($64 billion).

In South Korea, the Kospi was down 15.33 points, or 0.62 percent, at 2,448.81.

Hong Kong's Hang Seng index fell 1.15 percent as of 3:03 p.m. HK/SIN. Chinese mainland markets were mixed with the Shanghai composite declining 10.92 points, or 0.35 percent, to 3,117.99 and the Shenzhen composite rose 4.85 points, or 0.26 percent, to 1,809.25.

Australia and New Zealand markets were shut for the Anzac day public holiday.

"Risk off sentiment heightened after the 10-year U.S. Treasury yield touched 3 [percent] handle for the first time since Jan. 2014," analysts at Singapore's OCBC Bank wrote in a morning note.

"The normalization of U.S. yield at a faster than expected pace raised the concern about equity valuation, which led to increasing market volatility," they wrote. The analysts added that the recent dollar surge paused despite investors trying to "re-establish the correlation between dollar and higher yields."

The dollar index, which measures the greenback against a basket of currencies, traded at 90.981 as of 2:43 p.m. HK/SIN. The index rose from levels below 90.00 reached in the previous week and briefly crossed the 91.00 level in the Tuesday session.

The Japanese yen traded at 109.10 to the dollar while the euro fetched $1.2211.

Oil prices fell overnight as concerns that the U.S. might reinstate sanctions against Iran faded.

President Donald Trump on Tuesday said that the U.S. could soon reach an agreement with France that would preserve the 2015 Iran nuclear deal.

Trump made his comments during a news conference with French President Emmanuel Macron, who is trying to dissuade his American counterpart from pulling out of the accord.

Still, Eurasia Group analysts said in a note that it did not change their "overall call that the Iran nuclear deal has a 65 [percent] probability of collapsing during Trump's first term."

But many analysts also believe that an oil market slump which started in 2014 has ended and that a sustained price rally is likely due to supply disruptions and strong demand from Asia, according to Reuters.

On Wednesday afternoon during Asian hours, oil prices were down a notch — U.S. crude was lower by 0.13 percent to $67.61 and global benchmark Brent declined 0.12 percent to $73.77 a barrel.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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— CNBC's Tom DiChristopher and Reuters contributed to this report.