Stocks wobble as bonds slump to monthly loss

On Tuesday, Asian equities faced challenges as oil prices and bond yields rose, creating an unfavorable situation for investors. The 10-year US Treasury yield hit a 19-year high at 5.27%, marking a nearly 50 basis point increase throughout September. This surge in yields, particularly the 2-year yield, which rose over 57 basis points this month, indicates that US growth and inflation could drive additional Federal Reserve rate hikes by mid-year.

Sovereign yields, which serve as reference prices for riskier stocks and benchmarks for mortgages and corporate borrowing, reflect the pressures on government, corporate, and household budgets due to higher interest rates. Bond markets in Japan, South Korea, and Australia experienced pressure, leading to most regional equity markets slipping.

Analyst Angus Hui of Fullerton Fund Management in Singapore stated that the new financial environment is characterized by increasing interest expenses in developed markets, stretching sovereign finances and potentially limiting a recovery for bonds if the global economy slows down. Meanwhile, crude futures remained stable around $106.60 a barrel.

Fragile sentiment in China's technology sector, affected by US plans to ban Chinese components from data centers, caused the blue-chip CSI300 index to reach a one-year low. Despite the challenging market conditions, the dollar was expected to gain a monthly increase, while the yen and euro remained relatively steady.