MSCI’s non-Japanese Asia-Pacific stock index dropped 0.9% to 667.99, Nikkei Stock Average in Japan declined 2%, CSI 300 index shed 1.2%, and Australia’s stocks lost 1.6%
Asian stocks dropped to a two-month low on Friday, setting the worst weekly performance since February.
Investors flocked to bond security overnight, with yields on 10-year Treasuries reaching unprecedented levels since February.
Risk aversion is in the air, said Rodrigo Catril, an analyst at the National Australia Bank.
MSCI’s non-Japanese Asia-Pacific stock index dropped 0.9% to 667.99, a level not seen since mid-May. Over the past week, the index has dropped 3.2%, the largest decline since early February.
The Nikkei Stock Average in Japan declined 2%. China’s stock prices are also weak, with the CSI 300 index for high-end stocks shedding 1.2%. Australia’s stocks lost 1.6%.
Analysts said the accumulation of events caused emotional shifts rather than a single catalyst.
Investor concerns were also raised by political tensions in the Middle East, Russia and China amid Beijing’s crackdown on foreign-listed Chinese companies.
Overnight, 10-year Treasury yields shed 2.8 basis points to 1.293%. They dropped 1.25% earlier in the day. 30-year government bonds shed 1.9 basis points to 1.925%.
In equity markets, the Dow declined 0.7%, the S&P 500 shed 0.86%, and the technology-focused Nasdaq lost 0.7%.
Interest rate movements reflect an easing federal signal and a decline in reflation optimism with growing concerns about the COVID Delta, said an analyst at Bank of America Securities. We believe these factors could continue to lower interest rates until the market stabilizes and finds a catalyst to reset prices to levels consistent with fundamentals.
Meanwhile, a reading on the number of Americans filing new unemployment claims on Thursday added to the view that the recovery of the employment market from the COVID-19 pandemic remains volatile.
