TOKYO (Reuters) – Asian stocks fell on Wednesday as US bond yields surpassed 3 percent and warnings from major US companies with higher costs led to fears that the corporate earnings boom is on the rise. near its maximum point.
MSCI's broader index of Asian stocks and The Pacific outside Japan .MIAPJ0000PUS fell 0.3 percent, hitting its weakest in almost three weeks, with Taiwanese high-tech stocks. The TWII fell to two-month lows due to worries about the slowdown in semiconductor demand. The Nikkei .N225 of Japan fell 0.2 percent.
European shares are expected to fall, and spread-betters register a drop from 0.7 to 0.9 percent in the British FTSE .FTSE, the Dax .GDAXI in Germany and the Cac.FCHI in France.
S & P E-mini futures ESc1 fell 0.2 percent. Wall Street stocks collapsed overnight, with the S & P 500.SPX falling 1.34 percent, the most in two and a half weeks.
Caterpillar industrial heavyweight ( CAT.N ) beat earnings estimates due to strong global demand, but its shares fell 6.2 percent after management said profits of the first quarter would be the "maximum mark" of the year and warned about the increase in steel prices.
"We have seen many companies announcing gains above estimates and their shares falling sharply," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Fujito highlighted important financial stocks such as Goldman Sachs ( GS.N ) and Citigroup ( CN ), as well as Google's parent company, GOOG.N, the company's first important technology in reporting profits, have followed a similar pattern.
Corporate earnings are in top form, and analysts estimate a 21.1 percent growth in the January-March quarter among US companies S & P500, according to Thomson Reuters data. A similar trend is expected worldwide.
(For a global corporate earnings chart, click on reut.rs/2FeyaIU)
"If stocks are falling when corporate profits are rising by 20 percent and the economy is growing at 3 percent, the market is in trouble, the market reaction so far seems to be starting to see the end of its long rally since 2009. Investors may be thinking that the best moment will soon be behind us, "he said.
Growing profits in US Treasury yields UU They feed fears that portfolio managers may transfer money to more secure fixed income securities at the expense of riskier assets such as stocks and emerging markets.
10-year performance, a benchmark for global borrowing costs, has been steadily increased by a combination of concerns about inflation, the growing supply of debt and the increase in borrowing costs of the Reserve Federal.
The performance of US Treasury bonds UU At 10 years, US10YT = RR went up to 3.009 percent. A break of its January 2014 high of 3,041 percent could return investors even more bearish.
Futures prices of the Funds Rates <0#FF:> have been falling steadily this month, with prices at a considerable possibility of three more rate hikes by the end of this year.
The impact is already having an impact on many emerging markets, with JPMorgan's emerging market bond index, which reached a two-month low.
In Indonesia, a market with one of the largest exposures to portfolios of foreign portfolios, the authorities have been intervening heavily to put a floor under the IDR = rupee, which has been flirting with two-year lows.
The Indian rupee reached a minimum of 13 months INR = IN.
"Higher yields undoubtedly have a negative impact on emerging markets, and we are likely to see emerging market bond issues," said Takahiko Sasaki, market economist at Mizuho Bank.
The dollar also gained a bit against the main currencies.
The euro stood at $ 1.2226 EUR =, not far from Tuesday's low of $ 1.2182, a low seen on March 1.
The dollar traded at 108.87 yen JPY = after jumping to a high 2-1 / 2 month high of 109.20 yen on Tuesday.
The Australian dollar fell 0.4 percent to a four-month low of $ 0.7572 = D4.
Against a basket of major currencies, the dollar index .DXY rose 0.2 percent.
Oil prices remained stable, but were below the highs of more than three years reached in the previous session, as growing inventories of fuel and production weighed in a market that would otherwise be bullish.
Brent LCOc1 was $ 73.86 per barrel, with few changes in the day. On Tuesday it rose to $ 75.47, its highest level since November 2014. The West Texas Intermediate (WTI) crude trades flat at $ 67.68.
Reorting by Hideyuki Sano; Edition of Kim Coghill & Shri Navaratnam