Asia report: Markets close lower as bond yields rise

Markets in Asia closed in a negative state on Tuesday, as rising bond yields and concern over the prospect of higher interest rates saw traders keep a firm grip on their wallets.

In Japan, the Nikkei 225 was down 0.9% at 28,222.48 after market participants returned from a holiday on Monday, as the yen weakened 0.21% against the dollar to last trade at JPY 115.44.

It was a red finish for the benchmark’s major components, with robotics specialist Fanuc down 2.4%, Uniqlo owner Fast Retailing losing 2.32%, and technology investing giant SoftBank Group dropping 2.35%.

The broader Topix index slipped 0.44% by the end of trading in Tokyo, ending the session at 1,986.82.

On the Covid-19 front, Japan’s Prime Minister Fumio Kishida announced that the country would maintain its strictly-controlled international border policies until the end of February in a bid to keep a lid on the spread of the Omicron variant.

The restrictions have seen all arrivals barred, except for Japanese citizens, since the outbreak of Omicron late last year.

On the mainland, the Shanghai Composite was 0.73% weaker at 2,567.44, and the smaller, technology-centric Shenzhen Composite lost 1.06% to 2,441.23.

Millions of people in China were plunged into fresh lockdowns during the day, after authorities reported 87 new Covid-19 cases in the Henan province, 13 in Shaanxi and 10 in Tianjin in Monday’s data.

Residents in the Henan city of Anyang, which has a prefecture-level population of more than five million, were ordered to remain home and banned from driving, with non-essential businesses closed.

Elsewhere in the province, schools and kindergartens were closed and on-premises dining banned at eateries in the city of Zhengzhou.

South Korea’s Kospi was the region’s odd one out, managing gains of 0.02% - just two-thirds of a point - to 2,927.38, while the Hang Seng Index in Hong Kong slipped 0.03% to 23,739.06.

The blue-chip technology stocks helped to underpin the Seoul bourse, with Samsung Electronics rising 1.15% and SK Hynix ahead 2.81%.

“Asian equities mostly traded in the red today,” said analysts at RaboResearch.

“The news of further lockdowns in China and Japanese PM Kishida keeping border restrictions in place may not have helped the mood, but it largely seems to reflect the weak start to the week in the US as well.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.16% at $82.12 per barrel, and West Texas Intermediate advancing 1.57% to $79.46.

In Australia, the S&P/ASX 200 lost 0.77% to 7,390.10, with the main board dragged down by the hefty financials index, which lost 0.99% on the back of growing concern that interest rates will be rising faster than previously expected.

The ‘big four’ banks were all on the back foot in Sydney, with Australia and New Zealand Banking Group down 1.3%, Commonwealth Bank of Australia off 1.51%, National Australia Bank losing 0.51%, and Westpac Banking Corporation 0.73% weaker.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.47% weaker at 12,831.73, led lower by travel sector software developer Serko, which slid 4.5%.

The Wellington-traded shares in the Australasian banking conglomerates were also in the red, with ANZ down 0.66% there and Westpac losing 0.94%.

On the currencies front, the down under dollars painted a mixed picture against the greenback, with the Aussie last 0.05% stronger at AUD 1.3931, while the Kiwi weakened 0.03% to change hands at NZD 1.4789.