Global Markets Fall on Worries About Central Bank Tightening

Equity markets across the Asia-Pacific region were lower Friday, tracking declines in the U.S. and Europe, as investors become more cautious about the prospects of global central bank tightening.

Australia was leading the declines early in the session, as a slump in the country's bank stocks pressured the benchmark index. Mining stocks there also fell following a report that the Australian government is expecting iron ore to have an average price of $62.40 per metric ton this year, down from an earlier forecast of $65.20.

The ASX/S&P 200 was last down 1.2%, with shares of Macquarie Group down 1.8%, while Westpac Banking was off 1.4% and National Australia Bank declined 1.3%.

Among mining companies, Fortescue Metals was off 3.4% and Rio Tinto declined 0.2%.

"Why would you buy?" asked Chris Weston, chief market strategist at IG in Australia, in light of the current weak market sentiment. "There is a pick-up in [shortselling] interest and there are few clouds over the macro outlook."

He noted that trading activity was broadly muted: "We are seeing very few bids coming through in the market with few people selling."

Elsewhere, Japan's Nikkei Stock Average was down 0.1%, while Singapore's Straits Times Index was off 0.4% and Hong Kong's Hang Seng Index also declined 0.4%.

In China, the Shanghai Composite Index was recently off 0.4%, dragged lower by a selloff in large-cap stocks, on concerns about a deleveraging-related liquidity crunch. On Friday, the People's Bank of China skipped open-market operations--a key tool to pump liquidity into the market--for the 11th straight session.

Meanwhile, yields in bond markets in Asia continued to rise on jitters about global central banks dialing back stimulus efforts. The latest declines in bond prices, which push yields higher, have been driven in part by minutes from the European Central Bank's last meeting that showed officials were considering dropping a pledge to accelerate bond purchases.

In Japan, investor focus was on Japanese Government Bond yields after the 10-year bond yield rose to a five-month high of 0.105% early Friday, prompting to Bank of Japan to announce a fixed-rate bond-buying operation, which sent yield a bit lower.

That effort was combined with the central bank increasing the amount of five-to-10-year JGBs it bought in its regular operation to Yen500 billion yen ($4.4 billion) from Yen450 billion earlier this week, in hopes of calming market jitters.

In the commodities market, silver futures plunged as much as 10% early Friday morning before quickly reversing to recover nearly all the declines, suggesting that the move may have been caused by a trading error.

If the drop "had real volumes behind it, [prices] would not have bounced back so quickly," said Stuart Ive, client manager at OM Financial. "It suggests trading error rather than anything more serious at this point of time."

Biman Mukherji contributed to this article.

Write to Lucy Craymer at

(END) Dow Jones Newswires

July 06, 2017 23:05 ET (03:05 GMT)