Tight China liquidity drags Asian shares; U.S. bond yields jump on stimulus hopes

Asian share markets recorded a subdued performance on Wednesday as tight liquidity conditions in China temporarily restricted buying. However, upbeat corporate earnings, stimulus-driven expectations, and easing retail-related disturbances greatly supported investors’ risk appetite.

MSCI’s broadest index of Asia-Pacific shares outside Japan tallied a 0.2% decline, while Japan’s Nikkei plunged 0.4%. Both indexes reversed courses after recording a three-day winning streak. The series of declines could be attributed to China’s tight liquidity as the country’s short-term interest rates accelerated.

Meanwhile, U.S. bond prices plunged deeper, with the 3-year yield reaching its highest level since March. The decline was mainly from strong economic figures and Washington’s move to legislate a massive stimulus package.