Asian Markets Tumble Amid Dollar Surge and Treasury Yield Spike

Asian shares declined on Friday as the robust U.S. dollar and climbing treasury yields influenced risk sentiment. Despite high-level meetings aimed at boosting China's economy, investors remain wary of rising trade tensions with the U.S. Gold and oil saw gains, but stock markets were mostly down.

On Friday, Asian markets experienced a downturn, influenced by a strong U.S. dollar and increasing long-term treasury yields, which are on track to post their largest weekly increase this year. Meanwhile, in Beijing, calls for increased debt and boosted consumption failed to lift Chinese equity markets, as policymakers brace for heightened trade tensions with the U.S. amid Donald Trump's potential return to power.

Over the week, interest rate cuts from Switzerland, Canada, and the European Central Bank have created rate differentials that favor the U.S. dollar. Notably, U.S. thirty-year yields surged by 22 basis points, the most significant rise since October 2023. With expectations of cautious communication from the Federal Reserve about future rate cuts, investors are adjusting their strategies.

Elsewhere, Chinese stocks fell as anticipated stimulus measures were not unveiled, disappointing investors. The Hang Seng Index in Hong Kong dropped 1.2%, while China's blue chips lost 0.7%. On the foreign exchange front, the dollar saw significant gains against major currencies, including the yen and the Swiss franc. In commodities, gold enhanced by 2% this week, and oil prices saw weekly gains despite the modest daily decline.

(With inputs from agencies.)