Asian shares slip on jitters over inflation, interest rates

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People wearing protective masks walk in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm Wednesday, Feb. 24, 2021, in Tokyo. Shares fell in Asia on Wednesday as investors weighed the possibility that inflation might prompt central banks to adjust their ultra-low interest rate policies. (AP Photo/Eugene Hoshiko)

TOKYO – Shares fell Wednesday in Asia as investors weighed the possibility that inflation might prompt central banks to adjust their ultra-low interest rate policies.

Hong Kong led the decline, losing 2% to 30,015.49. Tokyo's Nikkei 225 shed 0.8% to 29,923.82, In Seoul, the Kospi edged 0.2% lower, to 3,065.56. Australia's S&P/ASX 200 lost 0.9% to 6,778.40. The Shanghai Composite index gave up 1.1% to 3,596.04.

Investors remain increasingly focused on a big tick up in bond yields and how it affects stock valuations.

The large amount of stimulus being pumped into economies has been a factor in pushing bond yields higher, giving some investors pause as it revives worries about inflation that have been nearly nonexistent for more than a decade.

The yield on the 10-year Treasury note, which has climbed recently, was steady at 1.34% on Wednesday.

When bond yields rise, stock prices tend to be negatively impacted because investors turn an increasingly larger portion of their money toward the steadier stream of income that bonds provide.

Federal Reserve Chair Jay Powell told Congress Tuesday the Fed didn’t see a need to alter its policy of keeping interest rates ultra-low, noting that the economic recovery “remains uneven and far from complete.”

The message seemed to be muted in Asia.