Asian markets defy Wall Street’s losses, surge despite rising US yields

In the face of Wall Street’s recent losses and escalating US Treasury yields, Asian markets demonstrated resilience as they surged in early trading on Friday.

The optimism prevalent in Asian markets comes despite concerns that the Federal Reserve may maintain its tight monetary policies through the year-end and beyond, driven by the strength of the American economy, particularly evident in robust labor market data released earlier this week.

US Treasury yields reached their highest levels since 2007 during the week, causing unease among investors who fear that elevated borrowing costs for businesses and consumers could potentially hamper economic growth. Investors worldwide are now eagerly awaiting Friday’s release of the monthly US employment data, which will offer critical insights into whether recent indicators of a labor market slowdown will persist.

Stephen Innes, a strategist at SPI Asset Management, noted that stock investors are cautious in response to the decline in 10-year US yields, and the uncertainty index is on the rise due to concerns about the upcoming Non-Farm Payroll report.

While the Dow Jones Industrial Average ended Thursday’s trading session flat and the S&P 500 and Nasdaq saw slight declines, Asian markets displayed early strength on Friday. Hong Kong led the gains with an increase of over 1.5 percent, while Tokyo also experienced a modest uptick. Singapore, Seoul, and Mumbai also recorded gains, although mainland Chinese markets remained closed for a week-long holiday.

Peter Cardillo, an analyst at Spartan Capital, observed, “If there are any signs of weakness in the labor market, that could be positive for stocks and potentially drive them higher.”

Russ Mould, Investment Director at AJ Bell, emphasized the central role of the 10-year Treasury yield in this week’s market dynamics, with investors closely monitoring its movements.