Hong kong: Asian shares saw a significant rise on Thursday, driven by positive momentum from Wall Street and a notable surge in South Korea's Kospi, which jumped more than 6%. This uptick follows the US Treasury's announcement to substantially increase its purchase of longer-term government bonds.
According to United News of Bangladesh, US stock futures also moved higher after the Treasury's plans to at least double the size of its intended buybacks of longer-term government bonds were revealed. The strategy could alleviate the pressure on stock markets stemming from rising bond yields, as increased government bond purchases often push bond prices up and subsequently lower yields.
The Kospi in South Korea surged 6.1% to 6,858.91, rebounding from a 5.8% fall on Wednesday when investors offloaded shares linked to artificial intelligence. Leading the charge, Samsung Electronics rose by 9.7%, while SK Hynix, a key player in memory chip manufacturing, saw its shares jump 14.1% following the announcement of a substantial share buyback program.
In Japan, the Nikkei 225 climbed 1.3% to 66,178.26, recovering from earlier losses in the week. Despite reporting a trade deficit for the third straight month in July with record-high imports and exports, Japan's market was buoyed by gains from companies such as SoftBank Group, which increased by 3.8% due to its investments in OpenAI.
Hong Kong's Hang Seng Index recorded a rise of 1.1% to 25,786.32, and the Shanghai Composite edged up 0.3% to 3,905.23. Meanwhile, Australia's S and P/ASX 200 saw an increase of 0.3% to 9,066.40, Taiwan's Taiex remained relatively unchanged, and India's Sensex gained 0.7%.
Following the US Treasury's expanded buyback plans, US government bond yields fell, with bond prices and yields generally moving in opposite directions. This announcement seemed to assuage investor concerns about increasing borrowing costs. The S and P 500 rose by 0.2% on Wednesday, ending a three-day losing streak, while the Dow Jones Industrial Average and Nasdaq Composite each climbed by 0.2%.
US bond yields have been on an upward trend in recent months, fueled by inflation concerns related to the ongoing war in Iran, climbing government debt, and other economic pressures. The yield on the 10-year US Treasury note dropped to approximately 4.64% from 4.71% on Tuesday, though it remains higher than pre-war levels. Similarly, the 30-year Treasury yield declined to 5.18% from 5.28%.
In Asia, bond yields also eased after the US Treasury's announcement. Japan's 10-year government bond yield fell to about 2.83% from over 2.89% on Wednesday, having reached its highest point in nearly three decades.
Oil prices edged up on Thursday, with little progress reported in negotiations between the US and Iran. Brent crude, the global benchmark, increased by 0.3% to $91.90 a barrel, while US benchmark crude rose by 0.2% to $84.57 a barrel.
On the currency front, the US dollar strengthened to 158.60 Japanese yen from 158.16 yen, and the euro traded at $1.1676, showing slight movement.