Asian stock markets declined and US Treasury yields rose sharply following steep losses on Wall Street, driven by concerns over the US economy as President Donald Trump pushes for new tax cuts that may significantly increase the national deficit.
In Hong Kong, the Hang Seng Index dropped 79.2 points, or 0.33%, opening at 23,748.58.
Mainland Chinese markets also opened lower, with the Shanghai Composite Index down 0.17% at 3,381.86, and the Shenzhen Component Index falling 0.19% to 10,274.68.
A poorly received auction of 20-year US government bonds signaled investor worries about the country’s fiscal health, shortly after Moody’s downgraded the US’s top credit rating.
This news ended a recent period of gains that were fueled by easing China-US trade tensions and progress in trade negotiations with other countries.
Bond yields surged across maturities as investors demanded higher returns to hold US debt, with 30-year Treasury yields reaching their highest levels since late 2023.
The weak bond auction echoed fears similar to those seen after Trump’s tariff imposition last month, which had previously triggered a sell-off before the White House adopted a less aggressive stance.
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