Asia stocks rise on Wall Street gains, but high yields cap upside

Asian equities advanced in choppy trading on Tuesday, supported by a record close on the Nasdaq the previous night, while elevated U.S. Treasury yields and oil prices constrained broader risk appetite. The U.S. tech-heavy Nasdaq index rose 1.1% to a record close on Monday, with the S&P 500 gaining 0.7% and the Dow Jones Industrial Average adding 0.2%. U.S. stock index futures traded slightly higher as of 06:11 GMT.

In Tokyo, the Nikkei 225 gained 1.1%, while the broader TOPIX index rose 1%. Hong Kong's Hang Seng Index added 0.5%, and the Hang Seng TECH sub-index climbed 0.7%. South Korea's KOSPI index reversed course to fall 1% after opening higher, dragged down by losses in major chipmakers. Samsung Electronics and SK Hynix shares dropped between 1.5% and 3%. China's onshore financial markets remained closed for National Day and Golden Week holidays, with trading scheduled to resume on Thursday, Oct. 8.

Bond yields emerged as a significant headwind for equity markets. The 10-year Japanese government bond yield rose to 3.122% on Tuesday, marking its highest level since 2022. This move tracked the overnight surge in U.S. debt costs and reflected expectations for further policy tightening by the Bank of Japan. The U.S. 10-year Treasury yield touched 5.349% overnight, its highest since 2002, while the 30-year yield reached 5.703%. Higher borrowing costs and the relative attractiveness of bonds have weighed on equities, particularly high-growth technology shares.

Elsewhere in the region, Australia's S&P/ASX 200 rose 0.6%, while Singapore's Straits Times Index traded flat. India's Nifty 50 gained 0.5%, led by financial stocks. Investors focused on the Reserve Bank of India's policy decision due Wednesday, with markets expecting a 25-basis-point rate hike. Attention also turned to the Federal Reserve's September meeting minutes, also due Wednesday, for insights into policymakers' views on inflation and the timing of further rate increases.

Oil prices remained a key risk factor for regional markets. Brent crude hovered around $100 a barrel following a 1.9% decline on Monday, as Middle East exports increased and the Group of Seven pledged to boost supplies. Investors remained alert to potential renewed disruptions stemming from the U.S.-Iran conflict.