Asian stocks follow Wall Street lower, Treasuries, gold continue sell-off

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Stock markets around Asia went into reverse on Friday after Wall Street pulled back from a record high. The US dollar eased after a solid mid-week rally spurred by growing expectations Federal Reserve might lift interest rates again in March.

US markets have been the focal point for investors this week. Major Wall Street gauges closed at record highs on Wednesday, with investors taking heart from the relatively optimistic tone in US President Donald Trump’s address to Congress earlier in the week. Stocks appeared unfazed by a lack of fiscal policy clarity as well as commentary from US central bank officials suggesting a rate rise was imminent.

Japan’s Topix was down 0.2 per cent. Nintendo shares were a highlight, rising as much as 4.1 per cent as the company began the worldwide release of its new Switch video game console.

Hong Kong’s Hang Seng was down 0.5 per cent, while materials and energy stocks pushed Australia’s S&P/ASX 200 0.8 per cent lower.

China’s Shanghai Composite was down 0.5 per cent, while the technology-focused Shenzhen Composite eased 0.2 per cent.

The US dollar index, a measure of the currency against a basket of global peers, was down 0.1 per cent in Asia on Friday, after a rise of more than 1 per cent over the previous two sessions.

That was enough to provide Asian currencies with some respite, led by the Japanese yen, which was 0.1 per cent stronger to ¥114.28 per dollar after four straight days of decline. Data this morning showed core inflation in Japan turned positive for the first time since December 2015.

Yields on US 10-year Treasuries, which move inversely to price, were 0.9 basis points higher on Friday in Asia at 2.4869. The chances of the Fed raising short-term interest rates in March now sit at 90 per cent, according to market pricing, which has triggered a five-day slide in the 10-year Treasury price.

The prospect of tighter monetary policy has also seen gold sell off. Down 0.2 per cent in Asia at $1,231.71 an ounce, the yellow metal’s 1.2 per cent fall in the previous session was its largest one-day drop since mid-December.

Oil prices were recovering after a more-than-2 per cent drop on Thursday. Brent crude, the international benchmark, was up one-quarter of 1 per cent at $55.22 a barrel, while West Texas Intermediate gained 0.3 per cent to $52.75.

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