Asian stocks slide as Wall St enters bear market territory

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Asian stocks slide as Wall St enters bear market territory

Asian stocks slide as recession fears send Wall St into bear market A man wearing a protective mask, amid the outbreak of coronaviruses, walks past an electronic board displaying various countries' stock indexes including the Russian Trading System RTS Index, which is empty, outside a brokerage in Tokyo.

HONG KONG Reuters- Asian shares fell on Tuesday after Wall Street entered bear market territory and bond yields hit a two-decade high on fears that aggressive U.S. interest rate hikes would push the world's largest economy into recession.

Early in Asia, the broadest index of Asia-Pacific shares outside Japan was down 0.9%.

Australian shares of S&P ASX 200 fell by 5% in early trade, while Japan's stock index fell by 1.74%.

Goldman Sachs forecast a 75 basis point interest rate hike at the Federal Reserve'sFederal Reserve's next policy meeting on Wednesday after a bleak session in the U.S on Monday.

James Rosenberg, Ord Minnett advisor in Sydney, told Reuters that the U.S. will see rate rise faster and higher than Wall Street has been expecting. There will likely be a double impact of earnings forecasts being trimmed and further price to earnings derating. Expectations for aggressive U.S. rate hikes went up after inflation in the year to May shot up by a sharper than predicted 8.6%.

The S&P 500 was down 3.88%, while the Nasdaq Composite lost 4.68% because of higher rates leading to a U.S. recession. The Dow Jones Industrial Average fell 2.8%.

The S&P 500 is now down over 20% from its most recent record closing high, which confirms that it is a bear market, according to a commonly used definition.

In the US stock market, benchmark 10-year Treasury yields hit their highest since 2011 on Monday and were inverted for the first time since April as investors braced for the possibility that attempts to stem rising inflation would hurt the economy.

The yield on benchmark 10 year Treasury notes rose to 3.3828% early in Asia, compared with its U.S. close of 3.371% on Monday.

The two-year yield, which has risen with traders' expectations of higher Fed fund rates, rose to 3.4002% compared to a U.S. close of 3.281%.

Higher inflation, slower growth and higher interest rates are a bad combination for financial assets, ANZ strategists wrote on Tuesday.

The dollar dropped 0.06% against the yen to 134.32, but remains close to its two-decade high of 135.17 reached on Monday.

The euro was flat at $1.0407, having lost 3.04% in a month, while the dollar index, which tracks the dollar against a basket of major currencies, was up to 105.19.

U.S. crude fell 0.06% to $122.14 a barrel. The price of crude was down per barrel.