BEIJING – Shares were mostly lower in Asia on Friday after stocks pulled back from their recent record highs on Wall Street as bond yields fell and investors turned cautious.
Benchmarks fell in Tokyo, Seoul, Sydney and Shanghai but rose in Hong Kong.
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U.S. futures were higher and the yield on the 10-year Treasury note rose to 1.33%. On Thursday it fell to 1.30%, its lowest level since February. It recently was trading at 1.74%.
Traders have been shifting money into bonds in recent weeks, pulling down the benchmark yield, which is used to set rates on mortgages and many other kinds of loans.
Tokyo's Nikkei 225 declined 0.6% to 27,940.42, while the Kospi in South Korea declined 1.1% to 3,217.95.
Investors are gauging the potential impact from COVID-19 variants stymying a resurgence in commerce and travel. In both countries, authorities have tightened pandemic precautions to counter fresh outbreaks of the coronavirus.
Fans also have been banned from the Tokyo Olympics, which begin later this month, amid a state of emergency aimed at containing rising coronavirus infections in the capital.
Sydney’s S&P/ASX 200 gave up 0.9% to 7,273.30, while the Shanghai Composite index edged less than 0.1% lower, to 3,524.09. Shares also fell in India and Taiwan, but they rose in Hong Kong, where the Hang Seng index gained 0.9% to 27,400.34.
Chinese consumer inflation eased to 1.1% over a year earlier in June, down from the previous month’s 1.3%, after global commodity prices eased, the government reported. Producer price inflation declined to 8.8% over a year earlier from May’s 9%.
On Thursday, the S&P 500 fell 0.9% to 4,320.82, weighed down by a broad slide driven mainly in technology, financial, industrial and communication companies.
The Dow Jones Industrial Average lost 0.7% to 34,421.93. The Nasdaq composite snapped a three-day run of closing highs, sinking 0.7% to 14,559.78.
Smaller company stocks also fell. The Russell 2000 index slid 0.9%, to 2,231.68.
Longer-term bond yields tend to move along with investors’ expectations for inflation and economic growth. Both are still very strong and much higher than they’ve been in recent years. But Wall Street increasingly suspects they’ve already topped out as the economy moves past the initial catapult phase of its recovery from the pandemic.
Part of the sharp drop in long-term bond yields could also be attributed to investors quickly reversing bets that they would continue rising as the economy continued its sharp recovery.
Two recent reports showed that the manufacturing and services sectors are still growing, but more slowly than in previous months and below economists’ expectations.
On Thursday, the Labor Department said the number of Americans filing for unemployment benefits rose slightly last week even while the economy and the job market appear to be rebounding from the coronavirus recession.
Investors are increasingly jittery over potential moves by central banks, especially the U.S. Federal Reserve, to wind down lavish support for markets that cratered at the outset of the pandemic.
Minutes from the Fed's June meeting showed officials are moving closer to reducing bond purchases, though most analysts don’t expect a reduction until late this year. At that meeting, policymakers said they planned to raise interest rates as soon as 2023, earlier than previously expected.
Investors will be turning their attention to corporate earnings starting next week, when major banks like JPMorgan Chase, Goldman Sachs and Bank of America report their results. Banks tend to be a proxy for the overall economy, so investors will be analyzing the reports closely and listening to what banks say about the status of lending and spending as the recovery continues.
Benchmark U.S. crude oil picked up 47 cents to $73.41 per barrel in electronic trading on the New York Mercantile Exchange. It gained 74 cents in the previous session, to $72.94 per barrel. Brent crude, the standard for international pricing, added 32 cents to $74.44 per barrel.
The U.S. dollar rose to 110.06 Japanese yen from 109.75 yen. The euro slipped to $1.1836 from $1.1846.