Asian equities showed a mixed picture on Friday, with Japan's Nikkei 225 extending its rebound while South Korea's Kospi remained closed for the Chuseok holiday. The divergence highlights the contrasting positions of two of the region's major markets as global bond yields surge.
The Nikkei rose approximately 1.3%, building on its recovery after Japan's market reopened from a holiday break. The broader Topix index gained about 1.2%. This resilience came despite Japan's own bond market pressure, with the 10-year government bond yield climbing four basis points to 3.115%, its highest level since 1996.
Higher sovereign yields typically raise the discount rate applied to future earnings, a particular challenge for richly valued technology shares. However, a weaker yen and renewed demand for large Japanese technology names helped keep the market in positive territory. JPMorgan strategists led by Mislav Matejka noted in a recent report that strong profit margins and relatively healthy corporate balance sheets should continue to support equities in the US, Europe, and Japan despite elevated yields.
Meanwhile, the Kospi last traded on Wednesday, closing 0.9% higher at 7,080.92 after giving back much of an early gain of almost 2%. That pause means Korean investors will return to a tougher global rates backdrop than when Seoul shut. On Wednesday, foreign investors sold a net 534.4 billion won of Korean shares, and retail investors sold 1.42 trillion won, while institutions bought 320.3 billion won. Samsung Electronics gained 3.25% and SK Hynix rose 1.2%, helping the Kospi finish higher before the holiday.
The next session will test whether Korea's semiconductor-heavy market can retain that momentum if oil and bond yields stay elevated. Daishin Securities researcher Lee Kyoung-min told The Korea Times earlier this month that higher crude prices and US Treasury yields had already weakened demand for riskier Korean assets.
The broader pressure is coming from the US bond market. The 10-year Treasury yield traded near 5.19% after touching 5.2251%, while the 30-year yield reached 5.5016%, its highest since 2004. Fed funds futures were pricing a 71% chance of another rate rise next month. Nigel Green, chief executive of deVere Group, argued that risk assets face a much tougher valuation comparison once risk-free US yields move above 5%.
Elsewhere, Hong Kong's Hang Seng fell about 1% and Australia's benchmark slipped 0.6%, while mainland China and Taiwan were also closed for holidays. MSCI's broad Asia-Pacific index outside Japan was little changed. Brent crude eased 0.8% to $105.75 a barrel after jumping 3% overnight following a Houthi missile attack on Saudi Arabia. The dollar was heading for a roughly 1% weekly gain.
The two sides agreed to extend their trade truce by two months, but significant differences remained over trade, AI, Taiwan, and Iran.
This article is for informational purposes only and does not constitute financial advice.
