Higher Bond Yields Weigh on Stocks as Oil Drops – Asia Market Wrap
Tech equities led losses in Asian equity markets, as increasing bond yields around the world called valuations into question following a record-breaking rise powered by AI shares.
MSCI’s Asia Pacific share average declined 0.7%, while South Korea’s Kospi, a leading indicator for AI investment, sank 3.7%. Futures contracts for the Nasdaq 100 Index fell 0.5% as sentiment toward the sector remained negative after the Philadelphia Semiconductor Index fell for the second day on Monday. The Dollar climbed higher against its major peers.
Global stocks are likely to fall for a third day in a row as concerns over Iran persist, despite Trump’s statement that he will hold off on any strikes against the Islamic Republic. While Brent crude slid 2% to around $110 per barrel on Tuesday as a result of Trump’s words, the commodity is still up about 80% this year, despite the fact that the critical Strait of Hormuz remains essentially closed.
Rising oil costs and inflationary concerns have pushed government debt yields from Japan to the US to multi-year highs. The yield on the US 30-year bond rose 2 bps to 5.14% on Tuesday, after reaching its highest level since 2023 the previous session. On Monday, Japan’s 30-year yield debt rose to its highest level since the maturity was first sold in 1999.
Earlier Monday, both the US and Iran claimed they had rejected new offers as insufficient to reach an agreement. According to Axios, the White House stated that Tehran’s proposal given through mediators on Sunday lacked substantive change. Meanwhile, Iran has suggested that US demands are unacceptable.
