Asian shares declined on Friday as volatility in global bond and currency markets kept investors on edge ahead of key U.S. employment data. The market unease was further compounded by elevated oil prices, spurred by rising military tensions in the Gulf region.
The Asia-Pacific share index, excluding Japan, fell by 0.5%, setting the stage for a weekly loss. Japan’s Nikkei index also experienced a dip, although it was still poised for a weekly gain. Meanwhile, mainland Chinese markets remained closed due to a public holiday.
U.S. Treasury yields were notably high, with the benchmark 10-year yield reaching its highest point in over two decades before slightly retreating. This turbulence in bond markets raised concerns about borrowing costs, inflation, and the future trajectory of interest rates.
European markets were not immune to these worries, particularly as fiscal concerns in France led to a significant widening of the gap between French and German government bond yields. The euro weakened against major currencies, including the U.S. dollar, yen, and Swiss franc.
Investors are closely monitoring the upcoming U.S. nonfarm payrolls data for insights into the health of the U.S. economy and implications for the Federal Reserve’s interest rate decisions. Wage growth data is also under scrutiny due to its potential impact on inflation.
The U.S. dollar remained strong after gaining against major currencies, while the yen weakened despite data indicating an acceleration in underlying inflation in Tokyo for September.
Oil prices stayed high amid reports of increased U.S. military deployments to the Middle East and China’s suspension of certain oil product exports. These developments have heightened concerns about global fuel supplies and added pressure on energy prices.