Asian stocks slump as multi-year rise in bond yield put pressure on market

As growing concerns about inflation prolonged a sell-off in Treasury bonds, driving rates to multi-year highs, Asian markets fell along with Wall Street benchmarks.

South Korea, Japan, and Australia all had lower shares. As rising bond yields around the world cast doubt on values, this set the larger MSCI Asia Pacific Index up for a fourth straight day of declines. Early Asian trading saw a little decline in US equity-index futures.

Yields on 30-year Treasury bonds reached levels last seen in 2007 on Tuesday due to concerns that rising energy prices would force the Federal Reserve toward an increase rather than a cut, given that oil prices are still above $100 and there is no indication that the Iranian crisis will abate. Early on Wednesday, trade in Treasury bonds was stable.

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The dollar index ended the day at its highest point in six weeks. At less than $4,500 per ounce, gold, a non-yielding asset, maintained its losses from the previous session. The Philadelphia Stock Exchange Semiconductor Index, or SOX, barely changed as chip shares offset previous losses during the US session.

After weeks of dismissing worries about the Middle East conflict in favour of optimism that expenditure on artificial intelligence would continue to drive corporate earnings growth, global equities have fallen for three days in a row. With investors increasingly wondering if the AI-driven boom has gone too far, too quickly, attention is now shifting to Nvidia Corp.'s earnings on Wednesday.

The Nasdaq 100 Index declined 0.6% and the S&P 500 dipped 0.7% as investors' appetite was curbed by increasing rates, sizzling US inflation data, and high oil prices.

Tuesday saw Treasury rates continue to rise, with the 10-year benchmark surpassing 4.65% and the 30-year benchmark getting close to 5.20%. European and Japanese bond markets declined on Tuesday as well.