By Gregor Stuart Hunter
Asia-Pacific equity markets followed U.S. stock benchmarks lower as global government borrowing costs continued to rise.
Indexes in the region hit session lows by midday, with Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.99% falling 1.5%. Benchmarks in Taiwan , Hong Kong and Australia /zigman2/quotes/210598100/delayed AU:XJO -2.35% were each nearly 1% lower in recent trading.
The Nikkei, on track for its first five-day losing streak since November, slid as the dollar /zigman2/quotes/210561418/realtime/sampled JPYUSD -0.3310% pulled back from session highs against the Japanese yen at around ¥109.20. The dollar was recently around ¥108.70.
Taiwan, where many Apple /zigman2/quotes/202934861/composite AAPL +0.22% suppliers are based, weakened after the tech giant’s shares fell 2.1% Monday amid fresh speculation about potential iPhone production cuts. The company will report earnings on Thursday in the U.S. Taiwan Semiconductor Manufacturing Co. /zigman2/quotes/207385621/delayed TW:2330 -4.57% , the island’s biggest company, fell 2%.
The Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -3.64% , meanwhile, was hurt by two of its recent top performers—China Construction Bank /zigman2/quotes/208974133/delayed HK:939 -1.89% and Industrial & Commercial Bank of China /zigman2/quotes/201401473/delayed HK:1398 -3.44% . The city’s two biggest lenders each fell 3%, making up half of the index’s decline.
Some investors are becoming more cautious about equities, analysts say.
Valuations and volumes have surged above average recently, which means global markets could be primed to reverse course, said Robert Gillam, chief executive of McKinley Capital, an Alaska-based investment management firm that oversees $6.4 billion in assets.
“Am I worried for the immediate term? Sure,” he said. “The world is definitely due for a pullback.”
Capital Economics said emerging-market stocks’ “flying start” to 2018 isn’t likely to last. “We forecast that China’s economy will slow in the coming months,” it said, adding that it is unlikely that growth rebounds in smaller emerging-market economies such as Brazil will pick up the slack.
Elsewhere, President Donald Trump will deliver his first State of the Union address in less than 24 hours and 10-year Treasury yields, recently at 2.72%, are at their highest in nearly four years. The yield on 10-year German government bonds, known as bunds, was last at 0.69%, the highest level in almost three years.
American inflation data for December fell below its target and showed a slight loss in momentum. Still, Fed-fund futures were showing no chance of a rate increase by the Federal Open Market Committee; its two-day meeting begins Tuesday. The next increase isn’t expected until March.
The global oil benchmark was recently 0.5% lower in Asia trading.