Asian stocks turn volatile amid US slowdown fears

Beijing: Global stock markets were mixed Tuesday after a bond sell-off on Wall Street fuelled anxiety about a possible US economic slowdown and Australia raised interest rates.

London, Shanghai and Hong Kong declined. Frankfurt opened higher and Tokyo gained. The yen, trading at two-decade lows, fell further to almost 133 to the dollar. Wall Street futures were lower after the benchmark S&P 500 index rose 0.3 per cent on Monday and the market price of a 10-year Treasury bond fell. That increased its yield, or the difference between the day's price and the payout at maturity. The difference between short- and long-term Treasury yields is narrowing, which is 'making me a little nervous', because it suggests investors think a US recession is more likely, said Jeffrey Halley of Oanda in a report. "I don't think the US is at stagflation yet," or a period with high inflation and low growth, "but if oil stays above $120 a barrel, it might soon be," Halley said.

In early trading, the FTSE 100 in London lost 0.2 per cent to 7,595.92 while Frankfurt's DAX gained 1.3 per cent to 14,653.82. The CAC in Paris added 1 per cent to 6,548.78. Markets are swinging between gains and losses as investors weigh evidence about whether the Federal Reserve;'s interest rate hikes can cool inflation that is running at a four-decade high without tipping the US economy into recession.

On Wall Street, the S&P 500 future was off 0.6 per cent and that for the Dow Jones Industrial Average lost 0.5 per cent. On Monday, the Dow edged up less than 0.1 per cent. The Nasdaq composite gained 0.4 per cent to 12,061.37. The yield on the 10-year Treasury, or the difference between the market price and the payout if held to maturity, jumped back above 3 per cent to 3.04 per cent, up from 2.95 per cent late Friday. The Treasury yield is moving toward its levels from early and mid-May. Then, it reached its highest point since 2018 amid expectations for the Federal Reserve to raise interest rates aggressively. Bond buyers usually want a higher payout in exchange for tying up their money for longer periods. A flattening of the yield curve, or the long-term payout falling to match short-term bonds, is seen as an indicator of a possible recession because it shows investors expect economic conditions to be worse than they are now.

In Asia, the Shanghai Composite Index lost less than 0.1 per cent to 3,234.77 after Chinese authorities further eased anti-virus restrictions that shut down businesses in Shanghai and other major cities.