Nikkei 225, Hang Seng decline on eroding risk appetite, surging US Treasury yields

Asian stocks face continued losses on Friday, driven by a global bond market downturn that is eroding risk appetite. Additionally, investors are adopting a cautious stance, concerning the potential escalation of the Israel-Hamas conflict.

The prospect of higher interest rates in the US is unfavorable for regional markets as it diminishes their appeal for risk-oriented investments. Additionally, it imposes restrictions on the inflow of foreign capital into the region.

At the time of writing, China's SSE Composite Index is down by 0.27% to 2,997, Shenzhen Component Index has declined to 9,620, down by 0.36%, Japan’s Nikkei 225 fell to 31,375, decreased by 0.18%, Hong Kong’s Hang Seng is down by 0.41%, Korean KOSPI declined to 2,382 and Taiwan's Weighted Index has down by 0.20%.

Chinese stocks experienced losses on Friday over lingering concerns about the country's property sector, which has offset the positive impact of data indicating stronger economic growth.

The uncertainty surrounding a potential default by Country Garden Holdings has left traders cautious about Chinese assets. The beleaguered property developer reportedly missed a crucial payment on its international bonds this week, leading to increased wariness among traders.

The Japanese equity market experienced a decline as data on Friday revealed that consumer price index inflation exceeded expectations in September.

A key indicator of inflation, closely monitored by the Bank of Japan (BoJ), continued to hover near over 40-year highs. This suggests that underlying inflationary pressures in the Japanese economy are persistent and resistant to significant changes.

Asian technology stocks faced significant pressure this week due to a spike in global bond yields. The anticipation of higher interest rates has led to a decline in the attractiveness of growth stocks, impacting the performance of technology shares in the region.

The significant declines in major chip stocks SK Hynix Inc and Samsung Electronics contributed to the overall negative impact on South Korea’s KOSPI index.