Two-year U.S. Treasury yields topped 1% for the first time in almost two years, with investors concerned about a Fed policy rate rise soon as March, according to MELBOURNE, January 18, Reuters- Asia's share markets turned negative on Tuesday.
Early European markets were slightly weaker on Tuesday.
Concerns about supply shocks after Yemen's Houthi group attacked the United Arab Emirates, oil prices rose to their highest level in more than seven years.
MSCI's broadest index of Asia-Pacific shares outside Japan edged higher earlier in the session, as much as 0.4%, before turning down 0.45% in the afternoon.
The region's major markets, apart from some Chinese indexes, gave up their earlier gains.
Australian shares fell by 0.11%, while the blue chip CSI 300 Index bucked the trend to be 0.7% higher in China.
Hong Kong's Hang Seng Index fell from a 0.6% gain to trade down 0.42%.
The turn in sentiment came after two-year U.S Treasury yields, a bellwether for rate expectations, rose above 1% for the first time at www.reuters. The yields were at 1.0364% in the Asia afternoon.
The Pan-Region Euro Stoxx 50 futures fell 0.38% to 4,276 in early European stock trading. German DAX futures fell by 0.22% to 15,893 and FTSE futures fell 0.17% to 7,538. The S&P 500 e-minis, the US stock futures' futures, were down 0.47%, at 4,633%. The U.S. Federal Reserve is not expected to change rates at its Jan. 25 -- 26 meeting, but a growing number of investors think that March will be the beginning of a tighter cycle.
John Milroy, an adviser at Ord Minnett in Sydney, told Reuters that investors' focus remains on the Fed and the pace at which they raise rates.
We think it will be faster than anticipated. There is a tight labor market in the U.S. It's good for world growth but adds to the inflation pressures. Elizabeth Tian, Citigroup's equity derivatives director, said equities markets were reacting to the bond market moves.
She said there are fears that there are more aggressive and quicker rate hikes by the Fed.
She believes that the short-term equities market should be more supported because of the value of central bank liquidity that exists now, which is why the Fed is turning more hawkish.
We're saying it's too early because of the liquidity to be too bearish and it should be more of selling into the rally. The dollar index, which tracks the greenback against a basket of currencies of major trading partners, was up to 95.33.
Brent crude rose to $87.33 per barrel, up 1%, and just off a peak of $87.55, the highest price since October 2014. U.S. crude went up 1.32% to $84.93 a barrel.
An air strike killed more than 14 people in a building in the Yemeni capital of Sanaa, residents said on Tuesday during strikes across the city, launched by the Saudi-led coalition fighting the Houthi group.
The alliance strikes on Houthi-held Sanaa after an attack on the United Arab Emirates, which was claimed by the Iran-aligned Houthis on Monday, in Abu Dhabi, in which three people were killed.
ANZ Research analysts said that there was evidence of tightness across the market because of the new geopolitical tension.
Gold was slightly lower. 1642 per ounce.