Asian markets demonstrated remarkable resilience on Friday as MSCI's broadest index of Asia-Pacific shares outside Japan held steady despite a relentless global bond selloff that pushed long-term US yields to multi-decade highs, according to Business Standard. The modest gains came as a global bond selloff extended into Asia, with the yield on a global bond index hitting 4% for the first time since 2007. The return of oil above $100 a barrel, with Brent crude near $105, has revived inflation fears, bolstering bets on multiple Federal Reserve rate hikes after its first move in more than three years. Most markets including Chinese mainland, Taiwan and South Korea remained closed for a holiday, while Japan's Nikkei rose 1% and Australia's resources-heavy shares fell 0.6%. Hong Kong's Hang Seng index skidded 1%, highlighting the mixed regional performance amid the ongoing market volatility.
The global bond selloff reached unprecedented levels as the benchmark 10-year Treasury yield rose 1 basis point to 5.1915%, having surged 20 basis points in just two days to a new 19-year peak of 5.2251%, as reported by Business Standard. Thirty-year US bond yields climbed 2 basis points to 5.4805%, having surged 16 basis points over the past two days to hit 5.5016%, the highest since 2004. That lifted US mortgage rates to 7%, hamstringing the housing market. Fed funds futures now imply a 71% chance of another rate hike next month, up from about 53% earlier this week, and more than 90 basis points of tightening still to come this cycle. The US 2-year yields were steady at 4.9035%, having jumped 16 basis points this week to hover near a two-year high. Asian bonds extended the global selloff, with Japan's 10-year government bond yields up 4 basis points to 3.115%, the highest since 1996, and Australia's 10-year government bond yields also rose 4 basis points to 5.408%.
Japanese markets emerged as the standout performers in Asian trading, with Japan's Nikkei climbing 1% according to Business Standard. This strong performance came despite the Japanese yen holding largely steady at 158.78 per dollar, while the offshore yuan stayed flat at 6.7162. The gains contrasted with Australia's resources-heavy shares falling 0.6% and Hong Kong's Hang Seng index declining 1%. Japanese trading remained closed through a three-day holiday run spanning Respect for the Aged Day, a bridging Citizen's Holiday, and Autumnal Equinox Day, with markets there due to resume on Thursday. Japanese trading remained closed through a three-day holiday run spanning Respect for the Aged Day, a bridging Citizen's Holiday, and Autumnal Equinox Day, with markets there due to resume on Thursday.
Oil prices remained a significant source of pressure, with Brent crude easing 0.8% to $105.75 a barrel after climbing 3% overnight as a Houthi missile attack on Saudi Arabia revived fears of supply disruptions, according to Business Standard. However, some relief came as Brent edged lower Friday by 0.93% to $106.04 a barrel amid reports that US and Iranian negotiators were working on a phased arrangement that would see Tehran reopen the Strait of Hormuz in exchange for Washington lifting its blockade on Iranian ports. West Texas Intermediate crude fell 0.8% to $93.87 a barrel. Easing oil prices were doing much of the work in supporting equities, as cheaper crude eases inflation worries and takes pressure off bond yields. The prospect of higher energy costs colliding with a still-strong US economy is likely to keep pressure on bonds and equities as investors reassess how far the Fed may need to tighten policy, with the prospect of Iran reopening the Strait of Hormuz within a week, while Saudi Arabia said it expected to restore its East-West pipeline which is a 7 million barrel-a-day route bypassing the strait, within days.
Indian equities bore the brunt of global market turmoil on Thursday, with the Nifty tumbling to its lowest point since April 7, 2026, as reported by CNBC TV18. India's markets pointed to a soft opening, with the GIFT Nifty signalling a start in negative territory following the rough session. The 10-year US Treasury yield climbed to 5.13%, its highest since July 2007, while Brent crude pushed back towards $106 a barrel on renewed worries over the US-Iran conflict. A stronger US dollar, which crossed past 101, added further strain on the Indian rupee and metal shares. Banking and insurance stocks led the losses after IRDAI's draft distribution norms triggered heavy selling, with PB Fintech plunging 32% and Turtlemint dropping 20%, while Axis Bank and IndusInd Bank each fell around 5%. Volatility tied to monthly expiry and profit-taking at higher levels compounded the decline.
The Fed's return to rate hikes last week is rippling across global markets, with the US dollar rising 1% this week to 101.25 against its major peers, about the highest since late July, according to Business Standard. The return of oil above $100 a barrel, with Brent crude near $105, has revived inflation fears, bolstering bets on multiple Federal Reserve rate hikes after its first move in more than three years. The prospect of higher energy costs colliding with a still-strong US economy is likely to keep pressure on bonds and equities as investors reassess how far the Fed may need to tighten policy. The world's bond markets are screaming, and ignoring it could prove very expensive, said Nigel Green, CEO of deVere Group, as once risk-free rates sit above 5% in the world's largest economy, every asset on the planet has to justify its price against that.
