Asian Stock Markets Declined Due To Inflation Concerns

Asian stock markets declined due to the increase in bond yields and inflation concerns in the USA.

Asian stock markets declined due to inflation concerns. While the US bond yields fell due to rising and inflation concerns, tense negotiations between the US and China in Alaska also negatively affected the Chinese stock market. Stock markets in the Asia Pacific Region followed the selling trend in the US markets and fell on the last trading day of the week. In the negative course of the markets, the rise in bond yields and inflation concerns also had an effect. The negative impact of the tense negotiations between the USA and China was felt in the Chinese stock markets. In the CSI 300 index, the depreciation reached 3 percent.

Tension Rises at the Summit in Alaska

The first direct contact of the Biden administration with China in the USA started with the meeting, where harsh discussions took place. At the summit held in Alaska, the US and China harshly criticized each other on issues such as human rights, trade and foreign policy. US Secretary of State Antony Blinken discussed the cyberattacks undertaken by groups supported by China and the Beijing administration's behavior towards Muslim minorities. Blinken stated that China's steps "threaten the global order based on rules". Responding to this accusation, Chinese Politburo Member Yang Jiechi said "Western nations do not represent the global public opinion" and said that the US is "the champion of cyber attacks". Also interesting moments took place in the summit held in Alaska. As the cameras were being brought out, Yang shouted to the US delegation, "Is this the way you hoped for dialogue?"

Inflation Concerns Continue

The US 10-year bond interest rose to 1.75 percent, testing the highest level seen since January 2020. The jump in bond yields was recorded after US Federal Reserve (FED) Chairman Jerome Powell's announcement on inflation. Powell, at the press conference held on Wednesday, stated that if there is a rapid recovery in spending as economic activities return to normal, there may be a positive pressure in prices. On the other hand, he said that one-off increases in prices could only have temporary effects on inflation.

New Decisions from the Bank of Japan

The Bank of Japan (BOJ), which left the policy rate at -0.1% and the 10-year government bond yield target at 0%, also shared its new policy set with the public. The BOJ will allow the 10-year return target to move up to 25 basis points in the positive and negative direction. This is the first time that BOJ has specified an official range in its return target. The BOJ announced that it would not make a rigid intervention if there was a negative move in the yield and signaled a loose policy. The Bank also stated that, with the new mechanism called "fixed income security purchase operation on consecutive days", its goal is to "lower the short and long term interest rates faster". With these moves, the BOJ will try to alleviate the anxiety caused by the recently rising bond yields around the world. The bank also announced that it will only buy ETFs that follow the Topix index. With the effect of this announcement, there was a depreciation in the Nikkei 225 index.