AFP/APP – Asian markets swung on Friday with some recovering from early losses but traders remain on edge as over a rise in US Treasury yields to four-year highs, while fresh US political turmoil is also causing unease.
Equity traders around the world have been firing on all cylinders in recent months, sending markets to record or multi-year highs, on confidence in the global economy, healthy earnings and optimism over Donald Trump's tax cuts.
That improvement has also led central banks to temper their crisis-era stimulus measures, which has led to a rise in bond yields, including the key US Treasury market.
The price of benchmark 10-year Treasury bills is at levels not seen since April 2014, sparking fears a lift in interest rates will hit economic growth and divert money from equities.
With the Federal Reserve already in the midst of a rate raising cycle — it is tipped to hike at least three times this year — there is increasing concern about the impact on world markets.
“The performance of the bond market has got to be beginning to flash red to equities,” Mark Heppenstall, chief investment officer of Penn Mutual Asset Management, said.
“It seems we're reaching a critical level on interest rates that could throw some cold water on the party in the equity market.”
And Geoff Lewis, Hong Kong-based senior strategist for Asia at Manulife Asset Management, told Bloomberg Television: “If we see a sharp move up that would be a negative shock for the equity markets.”
Tokyo ended 0.9 percent down while Singapore shed 0.2 percent and Seoul dived 1.7 percent.
But Hong Kong, which in January chalked up a series of records, reversed the morning sell-off and was up 0.1 percent in the afternoon helped by bargain-buying.
Shanghai closed up 0.4 percent, Sydney rose 0.5 percent and Wellington was 0.4 percent higher. Manila, Bangkok and Jakarta were also higher.
On Thursday the S&P 500 and Nasdaq on Wall Street fell, although the Dow edged up.
The dollar was up slightly against its major peers but it is struggling to stage a strong recovery against the pound and euro as dealers bet on tighter monetary policy at the European Central Bank and preferable terms for Britain when it leaves the European Union.
The dollar was also being weighed by reports that the new head of the FBI could resign if Trump approves the release of an explosive secret memo at the centre of a political firestorm in Washington.
However, the yen eased after the Bank of Japan moved to reduce its own bond yields, which had been dragged up with US Treasuries.
Bitcoin fell below $9,000 for the first time since November after India said it did not consider cryptocurrencies legal tender and will look to eliminate their use as payment systems.
The remarks come after regulators in South Korea, China and Russia recently said they would clamp down on the unit.
The unit is now at $8,500, compared with its record high around $19,500 seen in mid-December at the height of a crypto-boom. Some analysts warn it could fall to $6,000.
Key figures around 0710 GMT
Tokyo – Nikkei 225: DOWN 0.9 percent at 23,274.53 (close)
Hong Kong – Hang Seng: UP 0.1 percent at 32,685.91
Shanghai – Composite: UP 0.4 percent at 3,462.08 (close)
Euro/dollar: DOWN at $1.2490 from $1.2507 at 2200 GMT
Pound/dollar: DOWN at $1.4255 from $1.4263
Dollar/yen: UP at 109.76 yen from 109.39 yen
Oil – West Texas Intermediate: UP 26 cents at $66.06 per barrel
Oil – Brent North Sea: UP 17 cents at $69.82 per barrel
New York – DOW: UP 0.1 percent at 26,186.71 (close)
London – FTSE 100: DOWN 0.6 percent at 7,490.39 (close)