Asian shares were mixed Friday after a global bond sell-off deepened and ahead of a US monthly jobs report due later in the day.
Oil prices steadied even as the US sends another aircraft carrier and more troops to the Middle East, and as President Donald Trump threatened more possible escalations against Iran.
Japan's Nikkei 225 fell 0.9 per cent to 68,326.72. South Korea's Kospi added 0.2 per cent to 6,984.96. Hong Kong's Hang Seng lost 2.7 per cent to 23,956.32, hitting the lowest level since July. Australia's S&P/ASX 200 gained 0.4 per cent to 8,651.30. Taiwan's Taiex advanced 0.2 per cent.
Markets in mainland China were closed for a holiday.
US futures edged up after US Treasury yields held steadier early Friday.
US bond yields remain in focus
In the bond market, the yield on the 10-year US Treasury was at around 5.25 per cent, after it reached 5.34 per cent on Thursday, the highest since 2002. It crossed the 5 per cent mark last month, as inflationary pressure from the global energy shock driven by the Iran war and rising US government debt pushed investors to demand higher returns.
The 5 per cent level on the US 10-year Treasury yield has been an “important psychological threshold” for investors, David Clewell, a portfolio manager at T. Rowe Price, said in a commentary this week.
Factoring in the US's resilient economic growth, there is a “credible” likelihood that the US 10-year Treasury yield can rise toward 5.5 per cent to 6 per cent, Clewell suggested. Ballooning bond yields have been putting downward pressure on stock markets, as higher borrowing costs can undercut stock returns.
Wall Street ends slightly higher
On Thursday, benchmark stock indexes fell sharply in Europe as government bond yields shot up. On Wall Street, the S&P 500 added 0.2 per cent, the Dow Jones Industrial Average edged up less than 0.1 per cent, and the Nasdaq composite rose less than 0.1 per cent.
Investors and traders are monitoring closely the US monthly jobs report for September to be released on Friday, as the data could provide more signal to the likelihood of an October interest rate hike by the Federal Reserve, after the Fed raised rates in September for the first time in three years.
Oil prices steady amid Middle East tensions
Oil prices declined modestly early Friday as uncertainties surrounding the situation in the Middle East and a de-escalation between the US and Iran dragged on.
The US military is deploying thousands of troops aboard a group of ships, including a third aircraft carrier, to the Middle East, according to a US official on Thursday, after Trump on Wednesday threatened to “blow them up” or make a deal, referring to Iran, in an exchange with reporters.
Brent crude, the international standard, lost 0.2 per cent to USD 102.13 a barrel after advancing on Thursday. That's well above the approximately USD 72 per barrel level in late February before the war.
The US dollar fell to 157.91 Japanese yen from 158.09 yen. The euro was trading at USD 1.1250, up from USD 1.1244.