Asian Markets Decline Amid Oil Price Surge and US Bond Yield Concerns

Asian stock markets opened lower on Friday, following a volatile trading day on Wall Street and a further surge in oil prices. The Hang Seng index in Hong Kong plunged by approximately 2.7% to around 23,956 points, its lowest level since July. Tokyo's Nikkei 225 index fell by about 0.9% to 68,326.72 points, after experiencing a jump the previous day. Seoul saw a slight increase of about 0.2%, while Australia's S&P/ASX 200 index rose by approximately 0.4%. Mainland Chinese markets remained closed for a holiday.

The pressure in Asia followed a rise in U.S. government bond yields to over 20-year highs before partially retreating. The 10-year Treasury yield was trading around 5.25% on Friday morning, after touching approximately 5.34%, the highest since 2002. Investors are awaiting the U.S. September jobs report, due later in the day, which could influence expectations regarding a further Federal Reserve interest rate hike in October.

Brent crude oil futures were trading around $102.10 to $102.20 per barrel, a slight pullback after a 4.4% jump the previous day to close above $102. U.S. WTI crude remained around $93 per barrel. This comes amid reports of the U.S. sending additional forces and an aircraft carrier to the Middle East, coupled with concerns over refined fuel shortages due to China's export suspension and Russia's diesel export restrictions.

Wall Street closed with slight gains on Thursday: the S&P 500 rose by about 0.2%, while the Dow and Nasdaq closed nearly unchanged. Following a speech by Federal Reserve Vice Chairman Philip Jefferson, who suggested the central bank might await further data before another rate hike, market expectations for an October rate increase were cut to about 25%-28%, down from around 69% a week prior. However, a high expectation for another hike by year-end persists.

In Israel, the Tel Aviv Stock Exchange is closed for the Simchat Torah holiday and is expected to resume trading after the holiday. For Israeli drivers, global price fluctuations remain relevant, with Brent crude above $102 and the dollar around 3.08 shekels keeping energy costs high, even after a decision to reduce the gasoline excise tax by 50 agorot starting next week. Any further movement in oil or the dollar could impact the regulated fuel price formula. European markets closed down by over 1% on Thursday, influenced by the same bond yields and energy prices.

Market attention is now focused on the U.S. employment data. A stronger-than-expected reading could reignite fears of an imminent rate hike, while a weaker reading might support stocks and bonds. Until then, the message from Asia is clear: volatility in bonds and oil continues to set the tone.