Asia stock markets rebounded on Tuesday as dip-buying returned to semiconductor shares following recent heavy losses, while analysts warned that the recovery was narrowly based as bond yields climbed and interest rate expectations continued to rise globally.
Analysts at Bank of America said inflation remains sticky enough that 46 of 68 global central banks are overshooting targets, helping explain why bond markets are repricing for tighter policy and why long-duration assets, private credit and several emerging market currencies are struggling. They also noted that nearly half of equity markets are already overbought, led by South Korea, Taiwan and Finland.
South Korea’s KOSPI led regional gains, jumping 3.4% after a sharp sell-off in the previous session, while Japan’s Nikkei rose 0.9% as it recovered from earlier losses. MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.5%, with Chinese blue chips up 0.4% after trade data showed exports rising 19.4% in May and imports climbing 27.4%, both above forecasts.
Sentiment was also supported by easing geopolitical tension after Israel and Iran said they would halt attacks on each other for now, helping crude oil pull back from earlier highs. Brent crude slipped 0.7% to US$93.57 a barrel while US crude eased 0.7% to US$90.62.
However, gains in equities were tempered by continued pressure in bond markets, with investors pricing in more central bank tightening. Two-year US Treasury yields held at 4.170% after touching their highest level since early 2025, while futures pricing showed increasing expectations of rate hikes from the US Federal Reserve and European Central Bank.
In currency markets, the US dollar remained firm at 160.17 yen, while the euro hovered near US$1.1538 and the pound edged up to US$1.3347. Gold was broadly steady at US$4,334 an ounce after recent volatility, reflecting ongoing uncertainty across rate and growth expectations.
Reuters
