BANGKOK — Asian stocks slipped Tuesday following a fall on Wall Street after rising yields in the U.S. bond market added pressure on stocks.
The Shanghai Composite Index lost 1.4% to 3,013.84, even as the Chinese government said the economy grew faster than expected at 5.3% in the first quarter of the year. . In quarterly terms, its growth was 1.6%.
Hong Kong’s Hang Seng lost 1.9% to 16,279.66.
Tokyo’s Nikkei 225 index fell 2.1% to 38,402.59 as the dollar continued to appreciate against the Japanese yen, hitting new 34-year highs. At midday, the dollar was trading at 154.33 yen, down from 154.27 yen.
The euro rose from $1.0626 to $1.0613.
Elsewhere in Asia, Taiwan’s Taiex led the regional decline, falling 2.6%. Bangkok’s markets were closed for the Songkran holiday.
In South Korea, the Kospi fell 2.3% to 2,609.13, while Australia’s S&P/ASX 200 fell 2% to 7,595.30.
On Monday, the S&P 500 index fell 1.2% to 5,061.82, following its 1.6% loss last week, its worst since October. The Dow Jones Industrial Average fell 0.7% to 37,735.11, and the Nasdaq composite fell 1.8% to 15,885.02.
Stocks were up sharply earlier in the day as oil prices fell on hopes that international efforts to calm escalating tensions in the Middle East might help. But Treasury yields also rose following the latest report on the U.S. economy, beating expectations.
The economy and financial markets are in a delicate phase where such strength raises hopes of corporate profit growth, but also harms prospects for interest rate easing by the Federal Reserve.
Traders want lower interest rates, which could provide a boost to the broader economy, and much of the U.S. stock market’s recent record highs are based on expectations of declines.
But strong reports like Monday’s, which showed U.S. shoppers increased their spending at retailers last month more than expected, are leading retailers to expect only one or two rate reductions this year, according to data from the CME group. That’s down from expectations of six or more reductions earlier this year. Some traders expect there to be no reduction as inflation and the broader economy have remained stubbornly above forecasts this year.
High interest rates and bond yields hurt the prices of all types of investments, especially those that appear expensive or those that compete for the same types of investors as bonds.
More influential was the weakness in stocks of big tech companies. Apple fell 2.2%, Nvidia fell 2.5% and Microsoft fell 2%. They have already benefited from low interest rates and often feel pressure when yields rise. Because they are also the largest stocks on Wall Street, their movements carry extra weight on the S&P 500 and other indexes.
Microsoft, for example, swung from an initial 1.2% gain to a loss in the afternoon and was the second largest force weighing on the S&P 500.
Some financial companies helped contain losses by announcing encouraging profits for the start of the year. There is pressure on businesses as a whole to generate higher profits as interest rates appear far less likely to provide near-term support.
On the oil market, a barrel of American crude for delivery in May rose 48 cents to $85.89 per barrel in electronic trading on the New York Mercantile Exchange. It fell 25 cents to $85.41 on Monday as political leaders urged Israel not to retaliate after Saturday’s Iranian attack involving hundreds of drones, ballistic missiles and cruise missiles.
Brent crude, the international standard, rose 48 cents to $90.58 a barrel. It fell 35 cents to $90.10 a barrel on Monday.
Rising oil prices this year have sparked concerns about their impact on inflation, which remains stubbornly high. After cooling significantly last year, inflation has consistently been higher than forecast every month so far through 2024.
On the bond market, the yield on 10-year Treasury bills rose from 4.52% Friday evening to 4.61%.
___
AP Business writers Matt Ott and Stan Choe contributed.
