Asian stocks set for biggest monthly drop since 2008

Asian markets fell more than 1% in some regions overnight, with the wider area set for its biggest monthly drop since the financial crisis of 2008.

Meanwhile, US 10-year Treasury bond yields hit a new record low of 1.62% as investors flocked to safe havens.

The MSCI Asia Pacific index fell 1% and is set for a monthly loss of 11%, according to Bloomberg, while the Nikkei fell 1.34%, shedding 115.655 points, to 8,517.54.

Japan’s factory output was weaker than expected in April due to slowing demand for electronic goods, particularly in China, the BBC reported. The Trade and Industry Ministry also forecast output to fall in May.

The Shanghai and Hang Seng indices also fell 0.11% and 0.70% respectively, following larger losses in Europe yesterday which saw the EURO STOXX 50 slide to 2,116.18, a decline of 44.13 or 2.04%.

Investors began dumping risk assets at the beginning of this month as the Greek debt crisis intensified and a default and ‘disorderly Grexit’ looked more likely.

Instead, buyers have flocked to the relative safe havens of government bonds leading to US yields to fall to a record low of 1.62% yesterday, said Bloomberg. This is lower than the 1.67% record set in 1946 which was briefly matched last September, according to the Wall Street Journal

Australian 10-year yields also fell below 3% for the first time while similar maturity Japanese government debt saw yields fall to 0.81%, a level not seen since 2003.

Yesterday, the yield on 10-year UK government bonds hit a new low of 1.71%, while the 10-year bund dropped to 1.34%.

 

This article was first published on Investment Week

 

 

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