MSCI’s broadest index of stocks in the Asia-Pacific region outside Japan was down 0.3%, after US stocks ended the previous session with small losses.
Australian stocks were down 0.65%, while Japan’s Nikkei stock index slipped 1.5%.
Rising US bond yields supported the dollar, with the US Currency Index measure against six peers climbing back above 100 to test last week’s nearly two-year high.
The Japanese currency bore most of the losses against the greenback, which hit 125.77 yen overnight, its highest since June 2015.
The yen has suffered in recent months, with the Bank of Japan committing to an ultra-easy policy while many other major central banks, led by the Fed, have embarked on a tightening of monetary conditions.
The euro has been rocked by politics, unable to hold on to gains from its mini-recovery on Monday after French leader Emmanuel Macron beat far-right opponent Marine Le Pen in the first round of presidential voting.
It was last stable at $1,087.
“U.S. stocks fell on Monday as investors grew increasingly concerned that the benchmark 10-year U.S. Treasury yield, which hit a three-year high, is beginning to slow the economy, and turning into the next earnings season to find signs of the impact of inflation on corporate earnings,” Ord Minnett research analysts wrote to their clients on Tuesday.
Chinese markets gained ground as signs emerged that some of the tough restrictions were beginning to ease in the country’s financial capital.
Global markets have been hit hard in recent months by fears that the war in Ukraine, the Fed’s monetary policy tightening and China’s new COVID-19 restrictions could set back global growth.
Hong Kong’s Hang Seng index gained 0.6% in morning trading on Tuesday, while China’s CSI300 index rose 0.4%.
Tech stocks weighed on Wall Exchange during Monday’s session, with the Dow Jones Industrial Average (.DJI) down 1.19%, the S&P 500 (.SPX) down 1.69% and the Nasdaq Composite ( .IXIC) by 2.18%. All 11 sectors of the S&P 500 fell.
Economists polled by Reuters expect the US consumer price index (CPI) to show an 8.4% year-on-year rise in March on Tuesday.
NatWest Markets economists are forecasting a 1.1% jump in the month-on-month headline inflation figure, which would be the biggest monthly gain since June 2008.
“We’re pretty hawkish in terms of US rate hikes and we think it’s not just the amount of tightening but the pace that’s going to impact investors,” Elizabeth Tian, head of equity derivatives, told Reuters. Citigroup Sydney.
“Equity markets have been very resilient and quite loose relative to fixed income markets, but we expect the May Fed meeting to deliver some sort of announcement in terms of quantitative easing tapering. and that’s when we might see volatility emerge in equities.
“The question is going to be how the markets are going to react to the speed of the rate hikes that we might see.”
At the start of the Asian session, the yield on the benchmark 10-year Treasury bond rose to 2.8107% from its US close of 2.782% on Monday.
The two-year yield, which rises on traders’ expectations of a hike in federal funds rates, hit 2.5242% versus a US close of 2.508%.
US crude oil rose 0.85% to $95.09 a barrel. Brent crude rose $99.18 a barrel.
Gold was down slightly. Spot gold was trading at $1951.45 per ounce. [GOL/]