Asian stock markets experienced an upward trend on Thursday, influenced by positive developments on Wall Street. US futures also saw a slight increase following the Treasury Department’s announcement to significantly expand its planned purchases of long-term government debt. This strategy is anticipated to alleviate some of the pressures exerted by the bond market, consequently lifting bond prices and reducing yields.

Leading gains in the region, South Korea’s benchmark Kospi index surged by 6.1 per cent to close at 6,858.91. This rebound follows a severe drop of 5.8 per cent the previous day, primarily attributed to renewed selling in stocks linked to artificial intelligence. The gains were further bolstered by investor confidence as bond yields fell.

On Wall Street overnight, major indices including the S&P 500, Dow Jones Industrial Average, and Nasdaq composite each rose by 0.2 per cent. The decline in bond yields appeared to reassure investors regarding market stability and growth prospects.

Sector-Specific Developments in South Korea and Japan

In Seoul, notable movements were recorded as shares of Samsung Electronics increased by 9.7 per cent. Additionally, SK Hynix, a significant player in the memory chip market, saw its shares soar by 14.1 per cent following the announcement of an extensive share buyback programme. These developments contributed to the positive sentiment in the South Korean market.

Turning to Japan, the Nikkei 225 index rose by 1.3 per cent to close at 66,178.26, recovering from earlier losses in the week. Despite the positive performance in the stock market, Japan reported a trade deficit for the third consecutive month in July, although both imports and exports reached unprecedented levels. Shares of SoftBank Group also gained traction, rising by 3.8 per cent as it continues its investments in various sectors.

Other markets in the region also observed advancements. Hong Kong’s Hang Seng index climbed 1.1 per cent to settle at 25,786.32, while the Shanghai Composite index experienced a modest increase of 0.3 per cent, reaching 3,905.23. Australia’s S&P/ASX 200 rose by 0.3 per cent, closing at 9,066.40. Meanwhile, Taiwan’s Taiex index remained largely unchanged, and India’s Sensex moved up by 0.7 per cent.

Impact of US Bond Yield Changes on Global Markets

The US bond yields declined in response to the Treasury Department’s debt buyback initiative. Notably, the benchmark US 10-year Treasury yield decreased to approximately 4.64 per cent from 4.71 per cent recorded on Tuesday. Similarly, the 30-year Treasury yield fell to 5.18 per cent from 5.28 per cent. This reduction in yields follows a period of rising concerns over inflation related to the ongoing conflict in Iran and increasing government debt levels.

In Asia, the trend of easing bond yields followed suit, with Japan’s 10-year government bond yield dropping to around 2.83 per cent from over 2.89 per cent on Wednesday, after previously trading near its highest levels in three decades. These movements reflect a broader positive shift in the market environment.

Oil prices also showed signs of incremental growth, with Brent crude rising by 0.3 per cent to USD 91.90 per barrel. This contrasts with prices of approximately USD 72 per barrel recorded before the outbreak of the conflict. The US benchmark crude experienced a slight increase of 0.2 per cent, reaching USD 84.57 per barrel. Currency exchanges revealed a strengthening US dollar, now valued at 158.60 Japanese yen, compared to 158.16 yen previously. In comparison, the euro was positioned at USD 1.1676, a slight decrease from USD 1.1677.

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