Asian Stocks Decline as U.S. Treasury Yields Hit 2007 Highs

Most Asian stocks fell on Thursday, pressured by a sharp rise in global bond yields that saw U.S. Treasury yields reach their highest levels since 2007. Investor sentiment was also cautious ahead of a high-stakes meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Washington.

Surging Bond Yields Rattle Equities

A selloff in U.S. Treasuries overnight reverberated through global markets, pushing the benchmark U.S. 10-year yield to around 5.11%, a level not seen in nearly two decades. The 30-year yield also climbed above 5.4%. In Japan, the 10-year government bond yield surged to a 30-year high.

Higher yields on safe-haven government bonds increase the discount rate used to value future corporate earnings, which tends to weigh heavily on growth-oriented stocks, particularly in the technology sector. The move also fueled concerns that central banks may need to keep interest rates elevated for longer to combat persistent inflation, especially as oil prices remain high.

Regional Market Performance

Chinese and Hong Kong markets led the declines. China's blue-chip CSI 300 index dropped 1.3% and the Shanghai Composite fell nearly 1%. In Hong Kong, the Hang Seng index dipped 0.6%, with its tech sub-index sliding 1%.

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Key regional indices followed the negative trend:

• Australia's S&P/ASX 200 declined 0.7%. Data showed the country's unemployment rate rose to a five-year high, though strong employment growth kept expectations firm for a future Reserve Bank of Australia rate hike.
• Singapore's Straits Times Index edged down 0.2%.

Japanese shares bucked the trend, with the Nikkei 225 rising 1.5% as markets reopened after a three-day holiday. The gains represented a catch-up to earlier strength on Wall Street, though the rally was tempered by the sharp increase in domestic bond yields. South Korean markets were closed for a public holiday.

US-China Summit in Focus

Investors are closely monitoring the summit between Presidents Trump and Xi, with discussions expected to cover sensitive topics including trade, artificial intelligence, technology, and Taiwan. Ahead of the meeting, U.S. Treasury Secretary Scott Bessent said that Washington and Beijing had agreed to extend their existing trade truce by two months, providing a small measure of stability.