Business Maverick: Asian stocks tumble on heightened rate-hike fears: markets wrap

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A gauge of Asian equities dropped more than 1% on Wednesday, led by heavy declines in technology stocks, after hawkish rhetoric from Federal Reserve chair Jerome Powell hurt appetite for risk taking.

Hong Kong-listed Chinese technology companies fell more than 3%, with notable weakness also in South Korean and Australian shares. US futures fluctuated after a sharp slide on Wall Street on Tuesday, when the S&P 500 dropped the most in two weeks.

The two-year Treasury yield rose further above 5% on Wednesday and was at the highest level since mid 2007. The rate has now surpassed its 10-year equivalent by a full percentage point for the first time since 1981. This is playing out in a deeply inverted yield curve – a potential harbinger of recession.

“A 6% terminal rate is not out of the question now,” said Kellie Wood, deputy head of fixed income at Schroders in Australia. “Expect to see a broad-based selloff in Aussie and Asian markets today led by the short end but with US rates underperforming.”

 

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