Asian shares advance as US Treasury buybacks ease bond yield pressure

Asian markets climbed after the US Treasury expanded planned long-term debt buybacks and pushed yields lower. The move calmed investors across equities, though firmer oil prices kept geopolitical worries in view.

In Short

• Samsung gained 9.7 per cent and SK Hynix jumped 14.1 per cent
• Japan posted a third straight July trade deficit despite record imports
• US 10-year Treasury yield fell as expanded buybacks supported bond prices

Asian shares advanced on Thursday, tracking gains on Wall Street, while US futures also moved slightly higher after the Treasury Department said it would at least double the size of its planned purchases of longer-term government debt. The move helped ease pressure from the bond market, as such purchases would lift bond prices and help bring down yields.

South Korea led the regional gains, with the benchmark Kospi jumping 6.1 per cent to 6,858.91 after tumbling 5.8 per cent on Wednesday amid renewed selling in artificial intelligence-linked shares. On Wall Street overnight, the S&P 500, the Dow Jones Industrial Average and the Nasdaq composite each rose 0.2 per cent, with investors appearing reassured by the fall in bond yields.

In Seoul, Samsung Electronics climbed 9.7 per cent, while memory chipmaker SK Hynix surged 14.1 per cent after announcing a significant share buyback plan. Japan's Nikkei 225 rose 1.3 per cent to 66,178.26, reversing losses seen earlier in the week. Japan also reported a trade deficit for a third straight month in July, even as both imports and exports reached record highs. Shares of SoftBank Group, an investor in OpenAI, added 3.8 per cent.

Elsewhere in the region, Hong Kong's Hang Seng gained 1.1 per cent to 25,786.32 and the Shanghai Composite index rose 0.3 per cent to 3,905.23. Australia's S&P/ASX 200 was up 0.3 per cent at 9,066.40. Taiwan's Taiex was nearly unchanged, while India's Sensex climbed 0.7 per cent.

Bond yields in the US fell after the Treasury Department's announcement on the expanded debt buyback plans. Bond yields move inversely to bond prices. The benchmark US 10-year Treasury yield slipped to nearly 4.64 per cent from 4.71 per cent on Tuesday, while the 30-year Treasury yield fell to 5.18 per cent from 5.28 per cent. Yields had risen in recent months on concerns over inflation linked to the months-long war in Iran and growing government debt, among other factors. In Asia too, bond yields eased after the US move, with Japan's 10-year government bond yield falling to around 2.83 per cent from more than 2.89 per cent on Wednesday, after trading near 30-year highs.

Oil prices edged higher early on Thursday as there was little progress in US-Iran negotiations over the war. Brent crude rose 0.3 per cent to USD 91.90 a barrel, compared with roughly USD 72 a barrel before the war. US benchmark crude was up 0.2 per cent at USD 84.57 a barrel. In currency trade, the US dollar strengthened to 158.60 Japanese yen from 158.16 yen, while the euro was at USD 1.1676, slightly lower than USD 1.1677.

Overall, Asian markets rose as investors took comfort from lower bond yields following the US Treasury's debt buyback announcement, with South Korea posting the strongest gains, while oil prices moved up slightly amid a lack of progress in US-Iran talks.

With PTI Inputs

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