South Korean stocks staged a sharp rebound after a steep sell-off, while easing US bond yields and stronger technology shares lifted sentiment across Asian markets

Asian equity markets rebounded strongly on Thursday, August 20, tracking gains on Wall Street as investors responded positively to softer US Treasury yields and signs of improved liquidity conditions. South Korea led the regional recovery, with the benchmark Kospi surging more than 6% after suffering a sharp decline in the previous session.

The rally came as investors reassessed risk assets following recent volatility in global bond and equity markets. Technology stocks were among the biggest beneficiaries, with semiconductor majors Samsung Electronics and SK Hynix posting particularly strong gains.

Kospi Leads Regional Rebound

South Korea’s Kospi jumped 6.1% to 6,858.91, recovering sharply after falling 5.8% on Wednesday amid renewed selling in artificial-intelligence-related stocks.

The rebound was led by major technology companies. Samsung Electronics gained 9.7%, while SK Hynix surged 14.1% after announcing a significant share buyback plan.

The sharp reversal highlights how quickly sentiment can change in Asian technology markets, particularly after aggressive selling. Investors appeared willing to return to beaten-down semiconductor and AI-linked stocks as broader risk appetite improved.

Japan and Hong Kong Markets Also Gain

Japan’s Nikkei 225 rose 1.3% to 66,178.26, reversing some of the losses recorded earlier in the week.

Japanese markets were also influenced by movements in government bond yields. The country reported a trade deficit for a third consecutive month in July, although both exports and imports reached record levels.

SoftBank Group, a major Japanese investment holding company and investor in OpenAI, gained 3.8%.

Elsewhere, Hong Kong’s Hang Seng Index advanced 1.1% to 25,786.32, while the Shanghai Composite gained 0.3% to 3,905.23. Australia’s S&P/ASX 200 rose 0.3% to 9,066.40, while Taiwan’s Taiex remained broadly unchanged.

India’s Sensex was also trading higher, gaining around 0.7% during the session.

US Treasury Buybacks Ease Bond Market Pressure

One of the key drivers behind Thursday’s improved sentiment was an announcement from the US Treasury Department that it would at least double the planned size of its purchases of longer-dated government securities.

The move could support Treasury prices and, in turn, reduce borrowing costs by putting downward pressure on bond yields. Lower yields generally improve the relative attractiveness of equities and other risk-sensitive assets.

The US 10-year Treasury yield fell to around 4.64%, compared with 4.71% on Tuesday. The 30-year Treasury yield also declined to about 5.18% from 5.28%.

The easing in yields provided some relief to investors concerned about the recent rise in long-term borrowing costs.

Wall Street Sets a Positive Tone

US stocks ended higher on Wednesday, helping establish a more favourable backdrop for Asian markets.

The S&P 500 gained 0.2%, recording its first advance in four sessions. The Dow Jones Industrial Average also added 0.2%, while the technology-heavy Nasdaq Composite rose 0.2%.

The improvement came after a period of pressure caused by elevated Treasury yields, inflation concerns and uncertainty surrounding the global economic impact of geopolitical tensions.

Investors are closely watching whether the decline in bond yields can continue, as sustained lower yields could provide additional support to equity valuations.

Geopolitical Risks Continue to Influence Markets

Despite the improvement in risk appetite, geopolitical uncertainty remains a major factor for global investors.

Oil prices edged higher on Thursday amid limited progress in US-Iran negotiations. Brent crude, the international benchmark, rose around 0.3% to $91.90 a barrel, while US crude gained 0.2% to $84.57.

Oil prices remain substantially above pre-war levels, increasing concerns about inflation and corporate input costs.

A sustained rise in crude prices could complicate the outlook for central banks, particularly if higher energy costs begin feeding into broader consumer inflation.

Asian Bond Yields Ease

The decline in US Treasury yields also influenced Asian fixed-income markets.

Japan’s 10-year government bond yield fell to around 2.83%, from above 2.89% on Wednesday. The Japanese benchmark had recently been trading close to 30-year highs.

Lower bond yields can offer some relief to equity markets because they reduce the relative pressure on valuation multiples and borrowing costs.

However, investors are likely to remain cautious as government debt levels, inflation expectations and monetary policy continue to influence global bond markets.

Currency Markets Remain Closely Watched

Currency movements remained another important factor for Asian investors.

The US dollar strengthened to around 158.60 Japanese yen from 158.16 yen previously. The euro was largely stable at around $1.1676.

A weaker yen can support Japanese exporters by improving the value of overseas earnings when converted into local currency, although it can simultaneously increase the cost of imported commodities and energy.

For Asian economies that rely heavily on imported energy, currency and crude oil movements remain particularly important for inflation and corporate profitability.

Market Outlook

The sharp rebound across Asian markets suggests that investors are willing to return to risk assets when bond-market pressure eases. South Korea’s 6% jump demonstrates the strength of the recovery potential in technology-heavy markets after a sharp sell-off.

For Indian investors, the global setup remains cautiously positive. Strong gains in Asian technology stocks, softer US Treasury yields and a recovery in global equities could provide near-term support to domestic sentiment.

However, elevated crude prices, geopolitical uncertainty and persistent inflation concerns remain key risks. The sustainability of the current rebound will depend on whether bond yields remain contained and whether buying interest broadens beyond short-term recovery trades.

For Indian equities, investors should therefore watch global technology stocks, US Treasury yields, crude oil prices, currency movements and foreign institutional flows closely in the coming sessions.