Asia stocks slip as bond selloff weighs; Trump-Xi summit offers little relief

Asian markets experienced a decline on Friday following a significant global bond selloff, which contributed to a surge in long-term U.S. Treasury yields, hitting multi-year peaks. Investors were cautious, awaiting updates from the recent summit between U.S. President Donald Trump and Chinese President Xi Jinping. Despite this, Japan's Nikkei 225 showed resilience, climbing by 1.3%, while the TOPIX also rose by 1.2%.

The stronger yen supported Japanese exporters, leading to gains in these stocks. In contrast, Hong Kong's Hang Seng Index fell by nearly 2%, with its TECH sub-index dipping over 2.5%. Australia's benchmark S&P/ASX 200 also experienced a slight drop of 0.5%. China, South Korea, and Taiwan observed shortened trading hours, resulting in limited trading activity.

The bond selloff led to increased borrowing costs, with the U.S. 10-year Treasury yield reaching 5.1852% and the 30-year yield hitting 5.4705%, both of which were the highest levels in 19 years. Higher oil prices exacerbated inflation concerns, prompting expectations of further monetary tightening. Brent crude prices initially surged but experienced a slight decline after reports of a potential phased deal between the U.S. and Iran to reopen the Strait of Hormuz.

U.S. futures indicated a 70% probability of another Federal Reserve rate hike in October, up from 53% earlier in the week. The outcome of the Trump-Xi summit offered some trade stability, but several key issues remained unresolved, leaving investors uncertain about the potential for a lasting agreement. Singapore's Straits Times Index edged lower by 0.2%, and India's Nifty 50 futures traded relatively flat, suggesting a lackluster opening.