Asian Shares Mixed As Inflation Worries Mount

Asian stocks ended mixed on Tuesday after a sell-off in the U.S. bond market overnight fueled anxiety about a possible economic slowdown.

The yield on the 10-year Treasury jumped back above 3 percent amid expectations that tightening plans by major central banks would keep interest rates elevated for an extended period.

China’s Shanghai Composite index edged up 0.17 percent to 3,241.76 as more Covid-19 related restriction eased in Shanghai and other major cities. Hong Kong’s Hang Seng index slipped 0.56 percent to 21,531.67.

Japanese shares ended marginally higher as a weakening yen offered tailwind to exporters. The yen hit a two-decade low, falling to below 132 to the dollar on worries about persistent inflation in the United States.

The Nikkei average inched up 0.10 percent to 27,943.95 while the broader Topix index closed 0.41 percent higher at 1,947.03. Automakers surged, with Honda Motor and Nissan rallying 2.5 percent and 2.6 percent, respectively. Toyota Motor added 1.3 percent and heavyweight SoftBank Group rose 0.7 percent.

Seoul stocks tumbled, with the Kospi average losing 1.66 percent to settle at 2,626.34 on concerns about fast-growing inflation.

Australian markets fell sharply after the country’s central bank surprised markets by lifting the official cash rate by a bigger-than-expected 50 bps in a bid to contain inflationary pressure.

The benchmark S&P/ASX 200 declined 1.53 percent to 7,095.70 while the broader All Ordinaries index ended 1.54 percent lower at 7,318.60.

Retail stocks were hit hard on concerns that high inflation rates and rising interest rates will weigh on consumer spending this year. Wesfarmers lost 3.9 percent and JB Hi-Fi gave up 3.5 percent.

New Zealand shares ended lower as the RBA’s interest-rate decision surprised on the upside. The benchmark S&P/NZX-50 index dropped 1.33 percent to 11,265.70.

Medical device maker Fisher & Paykel Healthcare fell 3.3 percent and logistics firm Mainfreight gave up 4.2 percent. Pay-TV company Sky Network Television plummeted 7.2 percent after the company confirmed speculation that it is looking at buying radio and outdoor advertising firm MediaWorks.

U.S. stocks came off early highs to end slightly higher overnight, as crude oil prices briefly surged above $120 per barrel for the first time since March and the 10-year U.S. Treasury yield spiked above 3 percent for the first time since early May.

The Dow ended on a flat note, while the S&P 500 rose 0.3 percent and the tech-heavy Nasdaq Composite added 0.4 percent.

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