Asian Equities Advance as Bond Yields Retreat; U.S. Jobs Data in Focus

Asian stocks gained on Thursday as a retreat in global bond yields from multi-year highs improved investor risk appetite. The positive sentiment was also supported by steadier oil prices, while traders looked ahead to critical U.S. labor market data for signals on the Federal Reserve's interest-rate path.

Markets Buoyed by Easing Yields

A broad improvement in market mood followed a modest overnight rally on Wall Street and a significant easing in government bond yields. The benchmark U.S. 10-year Treasury yield pulled back to 4.784% after recently touching its highest levels in years. Similarly, the 10-year Japanese government bond yield eased to 2.97% after briefly crossing the 3% threshold for the first time since 1996 earlier in the week.

Major regional indices posted gains on the improved backdrop:

• Japan's Nikkei 225 rose 0.3%, while the broader TOPIX climbed 1.0%.
• South Korea's KOSPI was a strong performer, advancing 1.5%.
• China's Shanghai Composite and blue-chip CSI 300 both gained 0.5%.
• Australia's S&P/ASX 200 added 0.5%.

Regional Highlights and Economic Data

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In Japan, trading houses led the market higher, with Mitsubishi Corp. shares climbing nearly 5%. The sector received a boost after Berkshire Hathaway CEO Greg Abel reaffirmed the conglomerate's long-term commitment to its major investments in the country, according to the source.

Meanwhile, economic data from China presented a mixed picture. A private survey, the RatingDog services PMI, rose to 51.4 in August, indicating expansion and stronger domestic demand. This reading contrasted with China's official services gauge, which had previously signaled a contraction. In Australia, data showed the country's July trade surplus narrowed as exports fell 3.3% month-on-month.

Outlook Hinges on U.S. Payrolls

Investor focus is now squarely on the U.S. nonfarm payrolls report scheduled for release on Friday. The data is a key gauge of the U.S. economy's health and will be heavily scrutinized by the Federal Reserve as it considers its next policy move.

Market expectations for monetary policy remain tense. According to CME Group's FedWatch tool, traders are pricing in roughly a two-thirds probability of a 25-basis-point interest rate hike from the Fed later this month.