Asian markets trade mixed after Wall Street dip; oil tops $86 and August PMIs signal divergent regional growth

Asian stock markets exhibited a mixed performance on Friday, following a decline on Wall Street. The U.S. Treasury Department's initiative to increase its government debt buybacks proved insufficient in soothing market tensions.

In Japan, the Nikkei 225 experienced a minor drop of 0.2%, settling at 66,080.25 points. South Korea's Kospi index rose by 0.9%, closing at 6,914.09. Hong Kong's Hang Seng index saw a 0.7% increase, reaching 25,888.36. Meanwhile, the Shanghai Composite index remained flat at 3,903.81.

Australia's S&P/ASX 200 declined by 0.3%, trading at 9,053.90. Taiwan's Taiex index rose by 0.4%, while India's Sensex index decreased marginally by 0.1%.

The Treasury Department announced on Wednesday that it would at least double the scale of its planned purchases of longer-term government debt. Treasury Secretary Scott Bessent hinted on Thursday that the repurchase program could be more substantial than initially indicated. The announcement initially led to a decline in government bond yields, which had been high due to worries about inflation and the escalating tensions in the Middle East.

However, analysts expect the impact on bond yields to be short-lived. The U.S. 10-year Treasury yield was around 4.71% in early Friday trading, up from nearly 4.64% the previous day and back to a level close to what it was before the Treasury's announcement. The 30-year Treasury yield also rose to approximately 5.26%, from 5.18% on Thursday.

In Asia, bond yields also increased. Japan's 10-year government bond yield, which had been near 30-year highs, climbed to 2.88% from around 2.83% on Thursday. The recent rise in bond yields has negatively affected share prices. On Thursday, Wall Street benchmarks, including the S&P 500, Dow Jones Industrial Average, and Nasdaq composite, all experienced losses, with the S&P 500 falling 0.9%, the Dow Jones 1.3%, and the Nasdaq composite dropping 1%.