SYDNEY: Asian shares slipped on Monday as markets were forced to price in ever-loftier peaks for US and European interest rates, slugging bonds globally and pushing the dollar to multi-week highs.
China has manufacturing surveys and the National People's Congress kicks off at the weekend and will see new economic policy targets and policies, as well as a reshuffling of government officials. Fed futures now have rates peaking around 5.42 per cent, implying at least three more hikes from the current 4.50 per cent to 4.75 per cent band. Markets have also nudged up the likely rate tops for the European Central Bank and the Bank of England.
Higher rates and yields stretch valuations for equities, especially those with high PE ratios and low dividend payouts, which includes much of the tech sector. With the earnings season almost over, around 69 per cent of earnings have surprised on the upside, compared to a historical average of 76 per cent, and annual earnings growth is running around -2 per cent.
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