Asian Stocks Mostly Rise as Bond Yields, BOJ Outlook Weigh on Sentiment

Asian equities edged higher on Tuesday, recovering partially from a broad sell-off on Wall Street as global bond yields climbed and traders assessed the prospect of tighter monetary policy from the Bank of Japan.

U.S. stock futures and oil prices were little changed in early trading.

Japan’s Nikkei 225 rose 0.5% to 49,534.36, led by financial shares after central bank governor Kazuo Ueda hinted at a potential interest rate hike later this month. Hong Kong’s Hang Seng gained 0.7% to 26,209.07, while the Shanghai Composite slipped 0.3% to 3,902.78.

Australia’s S&P/ASX 200 added 0.2%, and South Korea’s Kospi jumped 1.5% to 3,977.85, lifted by technology heavyweights such as Samsung Electronics and SK Hynix. Taiwan’s Taiex climbed 1%, while India’s Sensex dipped 0.1%.

The advance in Asia followed a retreat on Wall Street, where the S&P 500 fell 0.5% to snap a five-day winning streak. The Dow Jones Industrial Average dropped 0.9%, and the Nasdaq composite declined 0.4%.

Last week’s rally had been fueled by growing expectations that the Federal Reserve will cut interest rates at its December meeting to support a softening labor market. However, sentiment shifted as longer-term Treasury yields rose globally after the Bank of Japan signaled it may raise rates soon.

Japan’s benchmark rate has lingered near zero for years in an effort to stimulate growth, but inflation has remained above the central bank’s 2% target. "The prospect of the Bank of Japan resuming its hiking cycle a bit sooner than previously thought has sent tremors through global bond and equity markets," said Thomas Mathews of Capital Economics.

Higher bond yields tend to draw capital away from riskier assets such as stocks and cryptocurrencies. Bitcoin fell toward $85,500, down about 6% from the previous day, dragging related stocks like Coinbase Global and Robinhood Markets lower.

On the corporate front, Synopsys rose 4.9% after announcing a $2 billion investment from Nvidia as part of an expanded partnership. Nvidia itself reversed early losses to close 1.6% higher.

Markets showed a mixed reaction to early holiday shopping data, with Black Friday and Cyber Monday sales appearing strong despite economic uncertainty. Williams-Sonoma gained 1.3%, while Best Buy fell 2.6%.

In Europe, France’s CAC 40 slipped 0.3%, weighed down by a 5.8% drop in Airbus after a software issue affecting its A320 fleet caused minor travel disruptions over the weekend.

In commodity markets, U.S. benchmark crude rose slightly to $59.34 a barrel, while Brent crude edged down to $63.13. The dollar strengthened against the yen, and the euro ticked higher.