Asian stocks rose on Thursday as robust corporate earnings helped Wall Street quell concerns about the surge in US bond yields, while the dollar hovered near 3-1/2-month highs against a basket of currencies.
MSCI’s broadest index of Asia-Pacific shares outside Japan bounced back from three-week lows plumbed the previous day and gained 0.35 per cent.
South Korea’s KOSPI climbed 1.2 per cent, with tech shares buoyed after Samsung Electronics posted a record quarterly profit.
Australian stocks edged up 0.2 per cent and Japan’s Nikkei rose 0.7 per cent.
Shanghai bucked the trend and slipped 0.3 per cent.
The Dow rose 0.25 per cent overnight, ending a five-day losing streak, and the S&P 500 gained 0.18 per cent on optimism over a spate of upbeat earnings that managed to offset jitters over rising US bond yields.
The spike to a four-year peak above 3.0 per cent in the 10-year US Treasury yield this week - a benchmark for global borrowing costs - had weighed on stocks amid concerns rising corporate borrowing costs could dampen profits.
Nonetheless, the broader equity market reaction to the latest jump in US yields appeared to be more measured compared to February, when a similar spike in rates sent stocks tumbling.
“The equity markets slid sharply in January and March in response to the rise in Treasury yields. But the Federal Reserve signalled in March that its rate hikes would be gradual,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
“Expectations towards US rate hikes being gradual are enabling equities to take the current yield rise in stride.”
The 10-year Treasury note yield rose to 3.035 per cent overnight, its highest since January 2014. The yield has climbed on expectations of a steady US economic expansion, accelerating inflation and concerns about increasing debt supply.
Higher US yields have dragged up their European counterparts, with 10-year German bund reaching a six-week high of 0.655 per cent and its British Gilt equivalent setting a nine-week peak of 1.57 per cent this week.
The dollar has drawn support from the surge in US yields, with its index against a basket of six major currencies last steady at 91.163 and within reach of 91.261, its highest since January 12 scaled on Wednesday.
The greenback has risen without pause through much of the past week as concerns over a US-China trade dispute receded, allowing the market to turn its attention back to dollar-supportive fundamentals.
The euro fetched $1.2176 after sliding to a 1-1/2-month low of $1.2160.
Immediate focus was on the European Central Bank’s monetary policy decision at 1145 GMT. The ECB is widely expected to keep policy unchanged but its comments will be followed closely for further guidance on the timing of its scaling-back of massive monetary stimulus.
The dollar was little changed at 109.360 yen after going as high as 109.490, its strongest since February 8.
Reuters reports that crude oil prices were up amid the prospect of fresh sanctions on Iran and concerns about output from Venezuela.
Brent crude added 0.6 per cent to $74.43 a barrel and US crude futures were 0.5 per cent higher at $68.38 a barrel.
Higher US yields and a stronger dollar weighed on non-yielding gold, with spot prices slipping to a five-week low of $1,318.51 an ounce overnight.