Asia-Pacific Markets Retreat Amid US Debt Concerns and Wall Street Declines
Asia-Pacific markets fell on Thursday, tracking sharp declines on Wall Street as investor concerns deepened over the potential fiscal impact of a proposed US budget bill.
The legislation, if passed, is expected to significantly increase the national deficit, contributing to a broader risk-off sentiment across global markets.
Japan’s Nikkei 225 dropped 0.84% to close at 36,985.87, while the broader Topix index shed 0.58% to finish at 2,717.09. South Korea’s Kospi fell 1.22% to 2,593.67, and the Kosdaq slid 0.82% to 717.67. In Australia, the S&P/ASX 200 declined 0.45% to close at 8,348.70.
Hong Kong’s Hang Seng Index fell 1.19% to 23,544.31, while China’s CSI 300 edged down 0.06% to 3,913.87. The region-wide CNBC 100 Asia Index lost 0.97%, reflecting broad weakness across Asian equities.
The market downturn followed a steep sell-off in US stocks on Wednesday. The Dow Jones Industrial Average dropped 816.80 points (1.91%) to 41,860.44. The S&P 500 lost 1.61% to 5,844.61, while the Nasdaq Composite fell 1.41% to 18,872.64.
Investor jitters were intensified by a sharp rise in US Treasury yields. The 30-year bond yield reached 5.09%, its highest level since October 2023, while the 10-year Treasury note climbed to 4.59%. These moves reflect growing demands from investors for higher returns in the face of mounting fiscal risks.
“Rates are now the clearest lens through which sentiment is being expressed,” said Ahmad Assiri, strategist at Pepperstone Group, noting that rising borrowing costs are putting pressure on risk assets.
The spike in yields followed the results of a 20-year US government bond auction, where buyers demanded yields as high as 5.047% to absorb $16 billion in new debt. This outcome added to fears that the US may face rising costs to finance its debt amid waning global appetite for its bonds.
Stephen Innes of SPI Asset Management noted that despite the US retaining deep and liquid capital markets, even that might not be enough to offset long-term structural deficits.
Asian markets were further weighed down by currency moves. The US dollar slipped to 143.27 yen, its lowest level in recent weeks, impacting export-heavy markets like Japan, where a weaker dollar reduces the value of overseas profits when converted into yen.
Sentiment was also dampened by policy uncertainties surrounding US President Donald Trump’s proposed tax legislation. Some analysts suggest the bill, paired with recent fiscal downgrades by ratings agencies like Moody’s, could have lasting consequences for the US economy and global markets.
Tan Jing Yi, analyst at Mizuho Bank, described the recent US stock selloff as a reaction to growing anxiety over the tax bill, characterizing it as a “Sell America” move.
With input from CNBC, Bloomberg, and the Associated Press.
