Most emerging Asian stocks and currencies rose on Thursday afternoon as lower U.S. Treasury yields and a weaker dollar lifted risk appetite after Washington eased bond market concerns.
The MSCI emerging Asia equities index jumped 2.3%, on track for its best day since August 5. The emerging market currency index rose as much as 0.4% to a record high before paring gains.
Market sentiment improved after the U.S. Treasury on Wednesday said it would double buyback sizes for long-duration debt, helping steady bond markets after the 30-year Treasury yield touched its highest level since 2007 earlier this week.
Lower U.S. yields tend to support emerging market assets by easing funding pressures and reducing the appeal of dollar-denominated investments, while a weaker dollar lends support to regional currencies.
Wei Li, head of multi-asset investments at BNP Paribas Securities (China), cautioned that the rebound appeared to be a relief rally rather than the start of a sustained recovery.
"While the Treasury’s signal provides a vital policy floor for yields, the underlying structural pressures remain unresolved. Rising global debt issuance, AI-driven corporate supply, and elevated oil prices maintain inflation risks."
South Korean stocks led regional gains, with the KOSPI jumping 5.9% as Samsung Electronics rose 8.5% and SK Hynix 11.9%.
Taiwan's benchmark reversed early losses to rise 0.5%, with heavyweight TSMC up 1.1%.
Indonesia's benchmark gained 1.5%, led by miners as a stronger rupiah and higher energy prices lifted commodity-linked stocks. The index is still down about 25% this year after MSCI's review of its market status.
"The Ringgit and Rupiah are benefiting from a "double tailwind": dollar weakness combined with elevated energy prices due to Iran tensions. Thus, while the dollar retreat is the necessary catalyst, domestic commodity exposure determines the relative strength of specific winners," said Li.
Malaysian shares added 0.3%, while the ringgit strengthened 0.3% to 4.04 per U.S. dollar after touching its strongest level since mid-June earlier in the session.
In contrast, Singapore's slipped 0.3%, weighed down by lender OCBC, which fell 0.7%.
On the currency front, The Philippine peso climbed 0.4% and the Thai baht added 0.1%, while the South Korean won bucked the regional trend, falling 0.4%.
The Taiwan dollar eased 0.2%. Investors' attention is now shifting to next week's Jackson Hole symposium, where remarks from Federal Reserve Chair could provide fresh clues on the U.S. interest-rate outlook.
HIGHLIGHTS:
* China Evergrande founder sentenced to life in prison
* JPMorgan entity among two firms barred in India over alleged closing auction manipulation
* Robots poised for 'ChatGPT moment,' Unitree CEO says
* US debt crosses $40 trillion threshold after doubling under Trump and Biden - Reuters
