Asian shares fell on Friday as investors grappled with wild swings in bond and currency markets ahead of key US jobs data, while a widening military buildup in the Gulf kept oil prices elevated.

In Hong Kong, the benchmark Hang Seng Index plunged 513 points, or 2.09 percent, to open at 24,099.

The China enterprises index was down 141 points, or 1.7 percent, lower at 8,078 while the tech index fell 76 points, or 1.81 percent, to 4,176.

Bond markets were again the centre of volatility overnight, with the benchmark 10-year US Treasury yields hitting the highest since 2002 at 5.34 percent after capping the biggest quarterly rise in 32 years. They later retreated and were steady at 5.2512 percent in Asia.

Fiscal worries in France pushed the spread between French and German sovereign bond yields above 140 basis points, the widest since 2012, rattling European stocks and hitting the euro hard. The single currency slid as far as US$1.1215, the lowest since May 2025, and sank against the yen and the Swiss franc.

With mainland markets closed until Wednesday for the National Day Golden Week holiday, other regional markets opened down.

In Tokyo, the Nikkei fell 643 points, or 0.93 percent, to open at 68,313 and was 585 points down at one stage before lunch.

In Seoul, the Kospi opened 33 points, or 0.47 percent, lower at 6,938 before edging up to be 12 points higher at one stage before noon.

All eyes are on the US nonfarm payrolls due later in the day. Forecasts are centred on a rise of 90,000 jobs in September, while the employment rate is likely to be steady at 4.1 percent. Much attention will be on hourly earnings after the ISM survey showed a huge jump in prices paid, pointing to more cost pressures.

"With the Fed now myopically focused on inflation and price pressures, a hot wages print could prove particularly influential for US rates, Treasuries and the USD," said Chris Weston, head of research at Pepperstone.

"Risk assets have so far absorbed the rise in US real yields, and long-end nominal Treasury yields remarkably well. However, a sustained increase in term premium could be far more problematic."

Markets currently price in a 25 percent probability that the Fed will raise interest rates again in October, down sharply from 69 percent a week ago after two top policymakers staked out an unusually clear case for taking in more data before deciding what to do next with interest rates.

However, a hike in December is still fully priced in.

Dovish comments from Fed officials drove a big rally in two-year Treasuries overnight, with the yield curve bull steepening as short-end yields fell. The two-year yield was last up one basis point at 4.8039 percent, after falling 10 bps overnight.

The 10-year Treasury yield rose two bps to 5.2575 percent, having dropped six bps overnight to ease from a 24-year high of 5.3445 percent as the brutal sell-off finally tempted some buyers back into the market. (Reuters & Xinhua)





Edited by Wendy Wong