Asia Mixed as Bond Markets Warn of Recession

Shares in Asia were inconsistent Thursday afternoon as the main yield curve in U.S. Treasurys inverted, triggering fears over the state of the U.S. economy.

In Tokyo, the Nikkei 225 index handed back 249.48 points, or 1.2%, Thursday to 20,405.65

In Japan, shares of Mitsubishi UFJ Financial Group slipped 1.09% and Nomura fell 0.6%.

The Japanese yen, widely viewed as a safe-haven currency, traded at 106.19 to the U.S. dollar after seeing an earlier high of 105.71.

Investors watched the bond market on Thursday, after the yield on the benchmark 10-year Treasury note briefly broke below the two-year rate overnight, an odd bond market phenomenon that has historically been a reliable indicator of economic recessions. The yield on the 30-year Treasury bond was also sent to a new record low on Wednesday.

In Hong Kong, the Hang Seng Index recovered 193.18 points, or 0.8%, to 25,495.46.

Hong Kong-listed shares of HSBC declined 0.91%, while China Construction Bank advanced 1.77%, as of their final hour of trading.

Australian markets flopped as data on Thursday showed the jobless rate unchanged despite employment numbers in the country soaring past expectations in July. The financial subindex declined nearly 3% as the so-called Big Four banks saw their stock decline: Australia and New Zealand Banking Group fell 3%, Commonwealth Bank of Australia shed 3%, Westpac slipped 3.2% and National Australia Bank dropped 3.1%.

The Australian dollar changed hands at $0.6777 after touching an earlier low of $0.6743.

CHINA

In Shanghai, the CSI 300 prospered 11.6 points, or 0.3%, to 3,694

The People’s Bank of China set its official midpoint reference for the yuan at 7.0268 per U.S. dollar on Thursday, weaker than analysts’ expectations.

It was the sixth consecutive session where the People’s Bank of China (PBOC) fixed the midpoint at a level weaker than the psychologically important seven-yuan-per-dollar mark.

The onshore Chinese yuan last traded at 7.0249 against the greenback, while its offshore counterpart changed hands at 7.0388 per dollar.
In other markets

Markets in Korea were shuttered for holiday

In Taiwan, the Taiex tumbled 100.6 points, or 1%, to 10,327.13

In Singapore, the Straits Times Index lost 21.51 points, or 0.7%, to 3,126.09

In New Zealand, the NZX 50 slumped 145.65 points, or 1.3%, to 10,704.11

In Australia, the ASX 200 dropped 187.8 points, or 2.9%, to 6,408.09