BANGKOK (AP) – Shares in Asia fell on Wednesday as investors weighed on the possibility that inflation could push central banks to adjust their low interest rate policies, despite assurances from the chairman of the Federal Reserve.
The retreat was led by Hong Kong, which lost 3.1% to 29,687.63 after the government announced that it would raise the stock tax from 0.13% to 0.13%. Increased revenues will help boost tax revenues as the government spends more to get the economy out of the epidemic.
Tokyo’s Nikkei 225 dropped 1.6% to 29,671.70. In Seoul, Cospin slipped 2.5% to 2,994.98. Australia’s S & P / ASX 200 lost 0.9% to 6777.80. The Shanghai Composite Index fell 2% to 3564.44.
India’s Sensex bypassed the regional trend, gaining 0.4% to 49,960.05. Singapore also won, while other regional benchmarks fell.
The Hong Kong government has announced $ 15.4 billion in epidemic aid to help the region recover from a 6.1% drop in its economy last year. Activities include loans for the unemployed, consumption vouchers and tax benefits. Hong Kong Finance Minister Paul Chan predicts that the economy will grow from 3.5% to 5.5% this year.
The move to raise the stock trading tax, the first in three decades, brought back shares of Hong Kong Exchanges & Clearing Ltd., which operates the stock exchange, down 12.4%. It closed 8.7% lower.
More broadly, investors are increasingly focusing on large increases in bond yields and how that affects stock valuation, analysts say.
Large-scale stimulus to economies has been a factor in boosting bond yields, pausing some investors as it revives inflation concerns that have been around for almost a decade.
The recent rise in the 10-year treasury bill was at a steady level of 1.33% on Wednesday.
As bond yields increase, stock prices tend to have a negative impact as investors direct more and more of their money into the steady flow of income that bonds provide.
Federal Reserve Chairman ome Jerome Powell told Congress on Tuesday that the Fed saw no need to change its policy of keeping interest rates extremely low, noting that the economic recovery “remains unequally far from perfect.”
The message seemed to be muted in Asia.
“Rising borrowing costs continue to be a major issue, as Fed Powell’s obscene statements on Tuesday helped stem the decline in US stocks,” IG’s Jingyi Pan said in a statement.
However, “Despite the encouraging comments made by US Federal Reserve Chairman Jerome Powell on low interest rates, Asian markets continued to be concerned about rising bond yields,” Pan said.
The explosion on Tuesday afternoon in Wall Street helped reverse most of the tech-centric sales, bringing the S&P 500 to its first profit after a five-day losing streak.
The benchmark index registered a profit of 0.1%, reaching 3881.37. The Dow Industrial ounce industrial average also increased by 0.1% to 31,57.35. The Nasdaq lost 0.5% to 13,465.20. The indicators were at all heights higher than two weeks ago.
The company’s smaller shares fell more than the wider market. The Russell 2000 Small Capital Index slipped 0.9% to 2231.21. The index, which is the biggest winner this year, fell 3.6%.
Since the epidemic began, investors have pushed up stocks in Big Tech to stratospheric heights, betting that quarantine consumers will make most of their purchases online, spending more on entertainment devices and services.
The bet mainly paid off. But the epidemic may be in its final stages, with millions of vaccines being administered in the United States and around the world. This can lead to consumers returning to their pre-epidemic habits.
Overall, investors continue to focus on the future of global economies hit hard by COVID-19 and the potential for greater incentives to correct them. The US House of Representatives is likely to vote on the stimulus package proposed by President Biden by the end of the week. It will include $ 1,400 in checks for most Americans, additional child support, billions of dollars in assistance to state and local governments, and additional assistance to businesses affected by the epidemic.
New York Mercantile Exchange lost 41 cents at $ 61.26 a barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents on Tuesday – $ 61.67 per barrel. Brent crude lost 24 cents to $ 64.24 a barrel.
The dollar rose from 105.24 yen at the end of Tuesday to 105.49 Japanese yen. The euro rose to $ 1.2155 from $ 1.2150.