Asian markets set for muted open amid bond sell-off

September 03, 2026 (MLN): Asian markets were headed for a subdued session on Thursday as a global sell-off in government bonds and renewed escalation in the Middle East conflict continued to weigh on investor sentiment.

Japan’s Nikkei 225 was set for a higher opening, with Chicago and Osaka futures trading at 64,560 and 64,480, respectively, compared with the previous close of 64,325.64, according to CNBC

Hong Kong’s Hang Seng Index futures stood at 25,367, slightly above the previous close of 25,311.21, while Australia’s S&P/ASX 200 futures were at 8,979 against Wednesday’s close of 8,978.4.

Asian equities had ended mostly higher in the previous session. South Korea’s Kospi gained 1.32%, while the Kosdaq declined 0.5%. Japan’s Nikkei 225 remained broadly unchanged, whereas the Topix advanced 0.8%.

Australia’s S&P/ASX 200 edged up 0.17%, while Hong Kong’s Hang Seng Index rose 0.61% and mainland China’s CSI 300 added 0.6%.

Global bond markets remained under pressure, with government debt selling extending a recent rout that has pushed borrowing costs to multi-year highs. In the U.S., the two-year Treasury yield climbed to 4.41%, its highest level since January 2025, while the 10-year yield briefly reached 4.818%, the highest since November 2023, before retreating from the session peaks.

U.S. equities, meanwhile, recovered on Wednesday after suffering three consecutive sessions of losses. The Dow Jones Industrial Average rose nearly 300 points, or around 0.6%, while both the S&P 500 and Nasdaq Composite gained about 0.5%.

U.S. stock futures were little changed in after-hours trading. S&P 500 futures edged up 0.02%, Dow futures gained 19 points, or 0.04%, and Nasdaq 100 futures rose 0.03%.

Oil prices also moved higher, with West Texas Intermediate futures gaining 0.9% to settle slightly above $91 a barrel as investors continued to monitor developments surrounding the U.S.-Iran conflict.

New York Federal Reserve President John Williams attributed the recent rise in Treasury yields largely to strong U.S. economic prospects rather than weakening financial conditions.

He pointed to robust corporate profitability and continued investment in artificial intelligence, data centres and technology as key drivers of the economic outlook.

Markets remain focused on the potential economic impact of renewed U.S.-Iran hostilities after both sides exchanged strikes following earlier signals that Washington could shift toward economic sanctions rather than further military action.

Investors will turn to U.S. weekly jobless claims on Thursday, while the closely watched August employment report is due on Friday. On the corporate front, Ciena and Campbell’s are scheduled to release quarterly results before the U.S. market opens, followed by Zscaler, DocuSign and UiPath later in the day.

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