Asian equities head for weekly slide as Treasury yields weigh

BENGALURU: Most emerging Asian equities were on pace for a weekly loss on Friday as elevated US Treasury yields and firmer oil prices stoked risk-off sentiment, though a softer dollar drove the South Korean won and Indonesian rupiah to multi-month highs. A surge in global bond yields, pushing the 30-year US Treasury yield to its highest since 2007 on unease over government finances, drove the selloff.

Compounding the pressure, a stalemate in US-Iran diplomacy sent oil to one-month highs, keeping inflation concerns front and center.

South Korea’s KOSPI and Taiwan’s benchmark remained set for a weekly slide of close to 2 percent. They both nudged higher intraday, up 0.9 percent and 0.7 percent, respectively.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent for the week, leaving it on track for its first weekly decline in five weeks.

The EM currency index pared gains from a record high touched earlier in the session but remained on course for an eighth consecutive week of gains.

With the 30-year yield already back up near 5.25 percent, Wu said high-multiple Asian tech names will stay under pressure until long-end yields fall for good, rather than just being temporarily held down by measures like the buyback. South Korea’s won climbed as much as 1.1 percent to an 11-month high before trimming gains to 0.7 percent, while Taiwan’s dollar added 0.2 percent.

Indonesia’s rupiah touched 17,790 per dollar at its strongest point of the day — a level not seen since mid-June — before easing to a 0.3 percent gain. Even so, it remains Asia’s worst performer this year, having shed nearly a quarter of its value on transparency worries and MSCI downgrade risk.