Asian shares track Wall Street higher, Treasury yields near multi-decade highs

Asian stocks climbed on Tuesday, following a tech-driven surge that propelled the Nasdaq to a record high. The retreat of oil prices added further support. Meanwhile, longer-term Treasury yields neared multi-decade peaks. The euro struggled near 17-month lows, pressured by rising fiscal worries in France, while investors offloaded French government bonds amid an unsatisfactory budget and heightened political uncertainty after Spanish Prime Minister Pedro Sanchez announced a snap election.

MSCI's broad Asia-Pacific index, excluding Japan, climbed 0.2%, while Japan's Nikkei increased 0.7%. European stock futures rose 0.5%. Futures for the Nasdaq gained 0.2%, and S&P 500 futures edged up 0.1%. The Nasdaq achieved a record close, driven by softer-than-anticipated jobs data that dampened expectations for a Federal Reserve rate hike this month.

Nvidia, an AI leader, surged 2.1%, reaching a record high and valuing the company at $5.76 trillion. The tech-led market rally was fueled by a slight easing of interest rate uncertainty and a minor reduction in geopolitical risk, enabling investors to concentrate on the exceptional earnings growth from AI stocks, according to Capital.com senior analyst Kyle Rodda.

The third-quarter earnings season began next week, with Goldman Sachs projecting a 27% rise in S&P 500 earnings for the quarter, with over half attributable to AI infrastructure spending companies. Latin American markets also surged, propelled by Brazilian stocks and the real currency, following right-wing Senator Flavio Bolsonaro's strong showing in the first-round presidential election, advancing to a runoff against incumbent Luiz Inacio Lula da Silva.

Despite scaling back bets for a Federal Reserve rate increase this month to 23% from 71% a week earlier, Treasury yields remained high as more data was needed before another tightening. US 10- and 30-year Treasury yields hit fresh 24-year highs, with the 10-year at 5.3089% and the 30-year at 5.6622%, both the highest since 2002.

The premium for French 10-year bonds over German debt narrowed to 137 basis points, calming the selloff. The euro weakened to $1.1215, its weakest level since May 2025, after falling to a low of $1.116 overnight due to deep divisions in French parliament, risking a dilution of fiscal consolidation proposals or a no-confidence vote. The US dollar index rose 0.9% to 102.2, while gold held steady at $4,141.31 an ounce.