South Korea’s Kospi jumps 4% as Asian stocks rise after bond rally
Asian equities and regional bond markets rallied on Thursday, August 20, after the United States Treasury announced an expanded program of long‑dated Treasury buybacks aimed at easing borrowing costs. The move helped steady the U.S. dollar, which had slipped to a three‑month low the day before.
Bond Market Gains
Government bonds in Japan, Australia and New Zealand all posted gains, echoing Wednesday’s advance in U.S. Treasuries. The Treasury’s decision to at least double the size of its buyback operations was intended to pull down yields on long‑term debt that had risen to levels not seen in decades. In Asian trading, the 30‑year U.S. Treasury yield slipped one basis point to 5.18 percent after a nine‑basis‑point drop on Wednesday. The benchmark 10‑year yield fell a similar one‑basis‑point to 4.63 percent, extending a six‑basis‑point decline recorded in the prior session. A Bloomberg index tracking Treasuries with maturities of 20 years or more jumped 1.7 percent on Wednesday, marking its largest single‑day rise since February 2025.
Asian Equity Momentum
MSCI’s Asia‑Pacific index climbed 1.6 percent, breaking a two‑day losing streak. The surge was led by a 5.8 percent jump in South Korea’s Kospi, the market’s strongest performer of the day. Technology shares rebounded sharply after SK Hynix announced a stock‑buyback plan, sending the memory‑chip maker’s shares up more than 12 percent. At 10:45 a.m. Tokyo time, S&P 500 futures were up 0.2 percent.
Regional Futures and Indices
Futures for Japan’s Nikkei 225 rose 1.1 percent, while the Topix also gained 1.1 percent. Australia’s S&P/ASX 200 edged higher by 0.2 percent, Hong Kong’s Hang Seng advanced 1.2 percent, and the Shanghai Composite increased 0.7 percent. The broader bond market had recently faced pressure as investors demanded higher compensation for inflation risk, rising sovereign debt and geopolitical tension in the Middle East. A wave of corporate borrowing to fund artificial‑intelligence projects added to the sell‑off that had weighed on equities earlier in the week.
Market Commentary
“The buyback suggests to me that the US Treasury is highly concerned about the long‑term borrowing costs,” said Gerald Gan, chief investment officer at Reed Capital. “Just like what he did for the Japanese yen, the effect will be temporary and the buybacks cannot be sustained for too long.” Gan’s view underscores the belief that the Treasury’s intervention may provide only short‑term relief.
Commodity Outlook
Gold prices eased 0.4 percent, settling around US$4,500 an ounce after reaching the highest level since early June. The modest decline came as investors shifted focus back to equities and bonds following the Treasury’s announcement.
Source: businesstimes.com.sg · 2026-08-20