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Asian stocks diverged on Tuesday as South Korea's KOSPI struggled to shake off pressure on semiconductor shares while Japan's Nikkei 225 recovered, leaving the region's two most AI-sensitive markets moving in opposite directions ahead of key US and Japanese rate decisions. The KOSPI fell as much as 0.76% in early Seoul trading before paring most of the decline, extending a difficult stretch after Monday's sharp technology sell-off.
The US 10-year Treasury yield on Monday briefly surged past 5% for the first time since 2023, driven by rising diesel prices, in a rally that could see borrowing costs balloon for mortgages and auto loans.
Iran-linked rebels force closure of east-west pipeline and capture strategic island in Bab al-Mandab strait
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US stocks and Treasuries caught some respite as oil prices eased, with traders waiting for the August US inflation report for the clearest signal yet on whether the Federal Reserve will hike interest rates next week. After surging yields and a rally in crude set the S&P 500 on course for its worst week since June, futures for the index rebounded 0.4%.
The U.S. 10-year Treasury yield creeps closer to 5% as Treasury Secretary Scott Bessent's market intervention disappoints, while crude prices move deeper into triple-digit territory. That's as President Trump doubles down on his pledge for a $5,000 “dividend” if Republicans win both the House and the Senate in the midterms.
The new Federal Reserve chairman has not convinced the market that the Fed will be working to dampen inflation. Rates on consumer and business debt are already trending higher.
The 30-year Treasury bond yield recently reached its highest level since 2007, sparking concern about a stock market sell-off. Long-term investors shouldn't worry too much about short-term moves in bond yields.