Asian stocks mixed after Wall Street bond sell-off

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BEIJING (AP) — Asian stock markets were mixed Tuesday following a bond sell-off on Wall Street amid anxiety about higher U.S. interest rates.

Shanghai and Tokyo advanced while Hong Kong and Seoul declined. The yen, already trading at two-decade lows, fell further to below 132 to the dollar.

Wall Street’s benchmark S&P 500 index rose 0.3% on Monday. while the market price of a 10-year Treasury bond fell.

Markets are “trading in a holding pattern” while traders wait for the Federal Reserve’s next moves on interest rates, said Yeap Jun Rong of IG in a report.

The Shanghai Composite Index SHCOMP, +0.17% advanced 0.2% to 3,243.73 after Chinese authorities eased anti-virus restrictions that shut down businesses in Shanghai and other major cities.

The Nikkei 225 NIK, +0.10% in Tokyo gained 0.2% to 28,031.15 while the Hang Seng in Hong Kong shed 0.2% to 21,605.10.

The Kospi 180721, -1.66% in Seoul tumbled 1.6% to 2,627.59 and Sydney’s S&P-ASX 200 XJO, -1.53% sank 1.3% to 7,106.30. The Reserve Bank of Australia lifted its official cash rate to 0.85% from 0.35% on Tuesday. That was a bigger hike than expected as the central bank fights to cool inflation . It follows a May hike, the first in more than a decade.

New Zealand and Singapore declined while Jakarta advanced.

Markets are swinging between gains and losses as investors weigh evidence about whether the Fed’s rate hikes can cool inflation that is running at a four-decade high without tipping the U.S. economy into recession.

On Monday, the S&P 500 SPX, +0.31% rose to 4,121.43 after being up as much as 1.5% during the day. The index is 13.5% below its Jan. 3 peak.

The Dow Jones Industrial Average DJIA, +0.05% edged up less than 0.1%, to 32,915.78. The Nasdaq Composite COMP, +0.40% gained 0.4% to 12,061.37.

The yield on the 10-year Treasury TMUBMUSD10Y, 3.028%, or the difference between the market price and the payout if held to maturity, jumped back above 3% to 3.05%, up from 2.95% late Friday.

The Treasury yield is moving toward its levels from early and mid-May. Then, it reached its highest point since 2018 amid expectations for the Federal Reserve to raise interest rates aggressively.

Economists at Goldman Sachs said in a research note they still see the Fed and its chair, Jerome Powell, on course to walk the line successfully and engineer what’s called a “soft landing” for the economy. That was more encouraging than some of the warnings that dragged on markets last week, including one from JPMorgan Chase CEO Jamie Dimon, who said he’s preparing for an economic “hurricane.”

On Wall Street, companies in the solar power industry were some of the biggest gainers after President Joe Biden ordered emergency measures to increase U.S. manufacturing of solar panels and exempted panels from Southeast Asia from tariffs for two years.

Twitter TWTR, -1.49% slipped 1.5% after Tesla TSLA, +1.60% CEO Elon Musk threatened to call off his deal to buy the company, saying Twitter was refusing to hand over data about possible fake accounts. Shares of Tesla rose 1.6%.

In currency markets, the yen USDJPY, +0.54% fell to 132.63 to the dollar from Monday’s 132.01.

The yen is depressed because Japanese interest rates have stayed near record lows while rates are rising in the United States and Europe. That helps Japanese exporters but pushes up to the price consumers pay for imported goods.

The euro EURUSD, +0.03% fell to $1.0684 from $1.0691.

Benchmark U.S. crude CL00, +0.41% gained 39 cents to $118.89 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 37 cents the previous day to $118.50. Brent crude BRN00, +0.33%, the price basis for international oil trading, advanced 30 cents to $119.89 per barrel in London. It fell 21 cents the previous session to $119.51.