Asian Equities Slump on Rising Yields and Oil Prices

Asian equities took a hit on Friday as rising global bond yields and high oil prices weighed on valuations and inflation concerns. The Nikkei 225 fell by around 0.8% in morning trade, extending its weekly loss to roughly 4.4%, while the KOSPI swung between flat and 1.35% lower before recovering some ground.

The moves came as US Treasury yields resumed their climb, erasing some of the relief provided by Washington's decision to expand long-bond buybacks. Brent crude remained above $93 a barrel, adding to funding costs and inflation fears that can quickly compress chip valuations.

Japan's market has an additional complication: accelerating inflation just weeks before the Bank of Japan's next policy meeting. Core consumer prices rose 1.8% in July from a year earlier, surpassing June's 1.6% growth rate. This trend suggests underlying price pressure is rebuilding, making Japanese rates and US yields even more daunting.

Rate-sensitive technology shares are particularly vulnerable to this mix of factors: higher discount rates reduce the present value of future earnings, especially for companies priced on aggressive AI and semiconductor growth assumptions. South Korea's KOSPI was initially down 1.35% but recovered much of its decline as SK Hynix remained relatively resilient.