Asian Stocks Mixed as Investors Await U.S. Jobs Data; Hong Kong Index Falls 3%

In Japan, the Nikkei 225 index closed down 0.9%, while the broader TOPIX index fell by 1%. The most significant decline occurred in Hong Kong, where the Hang Seng Index dropped 3% to reach an 11-week low of approximately 23,900 points. This decline followed a holiday and was exacerbated by rising global bond yields and ongoing concerns regarding oil supply. Hong Kong’s technology sector was also under pressure, with the Hang Seng TECH sub-index decreasing by 2.5%.

In South Korea, the KOSPI saw a modest gain of 0.5%, fluctuating between gains and losses throughout the day. Other regional performances included a 0.8% increase in Australia's S&P/ASX 200 and a 0.6% decline in Singapore's Straits Times Index. Meanwhile, mainland Chinese markets remain closed for the National Day Golden Week holiday and are scheduled to reopen on October 8. India's markets were similarly closed for Mahatma Gandhi Jayanti.

In economic data, Tokyo's core consumer price index rose 2.7% year-on-year in September, a jump from 1.8% in August and above market expectations of 2.4%. This growth has prompted some Bank of Japan policymakers to suggest the necessity for accelerated interest rate hikes as inflation risks intensify. Currently, the BOJ's policy rate stands at 1.25%, with market speculation around possible increases in its upcoming meetings.

The focus now shifts to U.S. nonfarm payroll data, projected to reveal an addition of 89,000 jobs in September, with unemployment expected to remain stable at 4.1%. Market assessments indicate a 25% likelihood of a Federal Reserve rate hike in October, a sharp decline from 69% a week earlier, while a rate increase in December appears fully priced in. Meanwhile, bond markets continue to exhibit significant volatility, with the U.S. 10-year Treasury yield reaching 5.34% on Thursday, the highest level since 2002, before easing to around 5.25% in Asian trading.