This reinforced bets on further US Federal Reserve rate increases.
The region’s equities rose over 0.2% in early trade despite the pressure from Wall Street’s bond rout. Hang Seng futures slipped 0.3%, while Japan’s Nikkei climbed 1.05% and the Topix added 1.15%. South Korea’s Kospi. remains shut for a second consecutive day on account of Chuseok. The Taiwanese index and the Chinese markets are also shut on account of Mid-Autumn festivities.
The Japanese yen held largely steady at 158.78 per dollar, and the offshore yuan stayed flat at 6.7162.
India’s markets pointed to a soft opening, with the GIFT Nifty signalling a start in negative territory. This followed a rough session on Thursday, when the Nifty tumbled to its lowest point since April 7, 2026.
Indian equities bore the brunt of the global turmoil on Thursday, dragged down by surging US bond yields, rising crude prices and a firmer dollar. The 10-year US Treasury yield climbed to 5.13%, its highest since July 2007, while Brent crude pushed back towards $106 a barrel on renewed worries over the US-Iran conflict.
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A stronger US dollar, which crossed past 101, added further strain on the Indian rupee and metal shares.
Banking and insurance stocks led the losses after IRDAI’s draft distribution norms triggered heavy selling. PB Fintech plunged 32% and Turtlemint dropped 20%, while Axis Bank and IndusInd Bank each fell around 5%. Volatility tied to monthly expiry and profit-taking at higher levels compounded the decline.Oil, meanwhile, remained a central factor behind the market stress. Brent crude rose for a second straight session to settle at $106.60 a barrel, extending its gains for the year past 75%.
Some relief emerged on Friday, however, as Brent slipped 0.5% amid reports that US and Iranian negotiators were working on a phased arrangement that would see Tehran reopen the Strait of Hormuz in exchange for Washington lifting its blockade on Iranian ports. West Texas Intermediate crude fell 0.8% to $93.87 a barrel.
Markets are expected to stay focused on oil prices and bond yields in the near term, with swaps now fully pricing in three additional quarter-point US Fed hikes over the coming year.
Two-year US Treasury yields have surged more than 150 basis points since the US-Iran conflict began, while 30-year yields have risen over 80 basis points over the same period.