Asia-Pacific Shares Finish Mixed as Investors Eye Rise in Treasury Yields

The major Asia-Pacific stock indexes finished mixed on Wednesday as investors reacted to the rise in U.S. Treasury yields that derailed the U.S. stock market rally the previous session. The market reopened in Hong Kong after a long holiday, but markets in mainland China remained closed on Wednesday for the Lunar New Year holidays.

Cash Market Performance

In Japan, the Nikkei 225 Index settled at 30292.19, down 175.56 or -0.58%. Hong Kong’s Hang Seng Index finished at 31084.94, up 338.28 or +1.10% and South Korea’s KOSPI Index closed at 3133.73, down 29.52 or -0.93%. Australia’s S&P/ASX 200 Index settled at 6885.20, down 32.10 or -0.46%.

US Stocks Pressured by Treasury Yield Jump

Overnight on Wall Street the benchmark S&P 500 Index settled lower as the benchmark 10-year Treasury yield jumped 9 basis points to top 1.3% – a level not seen since February 2020. The 30-year rate also hit its highest level in a year. The yield on the 10-year Treasury last stood at 1.2989%.

Hong Kong Stocks End Higher Ahead of China Markets Reopening

Hong Kong stocks ended higher on Wednesday, marking the seventh straight session of gains and extending a bull run ahead of the reopening of mainland markets after the Lunar New Year break, with sentiment lifted by optimism over global economic recovery.

The Hang Seng Index rose 1.10%, reaching its highest close since June 2018, while the China Enterprises Index increased 1.60%. The Hang Seng Tech Index surged 2.34% and the Hang-Seng sub-index tracking information technology firms climbed 1.88%.

An improving pandemic situation and expectations the bull run will continue when China markets reopen helped lift investor sentiment.

Japan Shares Slip from 30-year High on Profit Taking, Pandemic-Hit Stocks Rise

Japanese shares fell on Wednesday as investors booked profits after a recent rally drove them to a 30-year high, even as pandemic-beaten shares gained on expectations for an economic recovery from a coronavirus-driven slump. The declines followed a drop overnight in U.S. technology stocks.

“Investors are selling stocks for profit booking today. The market is taking a pause from a rising momentum,” said” Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

“Shares that were beaten down amid the pandemic are being bought as rising interest rates in the U.S. and Japan indicates an economic recovery. Rollouts of COVID-19 vaccines in Japan is another positive factor.”

South Korea Shares Snap Three-Session Winning Streak as Virus Cases Jump, U.S. Yields Rise

South Korean shares fell on Wednesday, after gaining for three consecutive sessions, as investor sentiment sapped on concerns over rising coronavirus cases at home and following a surge in U.S. Treasury yields on worries that a stimulus-fueled global recovery will stoke inflation.

Among major heavyweights, chip giants Samsung Electronics and SK Hynix dropped 2% and 1.9%, respectively, while LG Chem and Hyundai Motor slipped 2.2% and 1.6% each.

In other news, South Korea’s Prime Minister, Chung Sye-kyun, warned against the loosening enforcement of social-distancing rules after the country reported 621 new infections as of Tuesday midnight, the highest levels in 39 days.