Asian equities declined Thursday, pressured by a surge in oil prices and bond yields that retreated from recent record highs. The yield on the 10-year U.S. Treasury remained near a multi-decade high after minutes from the Federal Reserve's most recent meeting indicated that most officials expect another interest rate hike this year.
Major Asian indices closed lower, with Japan's Nikkei 225 falling 0.9% to 69,438.77 and South Korea's Kospi losing 0.8% to 6,750.25. Hong Kong's Hang Seng index declined 0.2% to 24,072.98, while the Shanghai Composite edged down 0.1% to 3,840.03. Australia's S&P/ASX 200 slipped 0.6% to 8,677.20, and Taiwan's Taiex dropped 0.7%.
| Index | Close | Change |
|---|---|---|
| Nikkei 225 | 69,438.77 | -0.9% |
| Kospi | 6,750.25 | -0.8% |
| Hang Seng | 24,072.98 | -0.2% |
| Shanghai Composite | 3,840.03 | -0.1% |
| S&P/ASX 200 | 8,677.20 | -0.6% |
The retreat in Asian markets followed Wednesday's performance on Wall Street, where the S&P 500 dropped 0.2% a day after reaching an all-time high. The Dow Jones Industrial Average slipped 0.7%, and the Nasdaq composite declined 0.2% from its record.
Rising bond yields have weighed on stock prices as higher borrowing costs affect companies and consumers. Yields on U.S. Treasurys have surged due to a global energy shock driven by the Iran war and continued growth in the U.S. national debt. The 10-year Treasury yield reached approximately 5.31%, having hit a high of 5.36% on Wednesday, its highest level since 2002.
U.S. inflation remains above the Federal Reserve's 2% target. In September, the central bank implemented its first rate increase in three years, moving the benchmark rate up by a quarter point to sit between 3.75% and 4.00%. Oil prices have also rebounded amid uncertainties over global crude supplies, as the U.S. and Iran have yet to reach a deal to end their war.
A report by The Atlantic, citing two unnamed officials, stated that the White House had asked the Pentagon to develop strike options against Iran before the November midterm elections. Early Thursday, Brent crude rose 2.2% to $102.43 per barrel, while benchmark U.S. crude increased 1.9% to $89.96 per barrel.
The International Energy Agency said Wednesday that its members support faster releases of oil from inventories.
In currency markets, the U.S. dollar rose to 158.20 Japanese yen from 158.08 yen. The euro traded at $1.1198, up slightly from $1.1197, amid elevated yields for French bonds and growing concerns about government debt.