KOSPI climbs 1.4% as bond rout pause faces US jobs test

The KOSPI climbed 1.4% to 6,654.76 Thursday, recovering part of a 3.99% plunge as a pause in the global bond selloff steadied Asian equities before Friday's US jobs report.

"Nonfarm payrolls have stepped down every month since March, so a downside surprise could take some of the shine off the bump in implied Fed rates post-Jackson Hole — though the hurdle is higher with the ongoing bond selloff keeping upward pressure on yields," said Uto Shinohara, senior investment strategist at Mesirow Currency Management.

South Korea led the region's recovery after suffering one of Asia's sharpest declines Wednesday. Samsung Electronics gained 1.4% and SK Hynix rose about 1%, lifting the technology-heavy benchmark off a two-week low, while Hyundai Motor advanced 1.5% and LG Energy Solution jumped almost 5%. The advance came despite continued foreign selling of about 300 billion won of shares by late morning, with institutions only modest net buyers — a sign Thursday's move is a relief rally rather than a decisive return of overseas risk appetite.

The broader MSCI Asia-Pacific index excluding Japan gained about 0.5%, while Hong Kong's Hang Seng rose 0.7%. Japan's Nikkei 225 was more restrained, edging 0.1% higher to 64,374, as lower yields supported equities but renewed Bank of Japan tightening expectations capped enthusiasm. The 10-year Japanese government bond yield fell about 4.5 basis points to 2.965%, retreating from Wednesday's multi-decade high above 3%, with Mitsubishi Corp. up 3.6% and Nomura Holdings up 2.5% among Tokyo's strongest performers. The yen strengthened toward 158 per dollar.

The durability of the rebound rests on Friday's US payrolls. Treasury yields retreated after weaker-than-expected private-sector employment data and New York Fed President John Williams said there was not yet clear evidence another immediate rate increase was necessary, calming fears of aggressive tightening. The 10-year Treasury yield was flat at 4.7961% Wednesday, about 1 basis point off its 2025 high, while Brent crude slipped 0.4% to $95.21. Fed Chair Kevin Warsh's hawkish Jackson Hole speech has traders pricing about a 70 percent chance of a hike the week after next week's expected European Central Bank increase.

Higher yields have weighed on equity valuations globally, with the sovereign-debt selloff driven by rising energy costs, ballooning government deficits and heavy borrowing by US tech firms funding the AI boom. Japan's 10-year yield topping 3% for the first time in three decades has put Prime Minister Sanae Takaichi's investment plans under scrutiny, while Britain and France face budget battles that could extend the pressure. Nomura's chief macro strategist Naka Matsuzawa said hyperscalers' willingness to pay reasonably high rates was pulling up yields broadly, with the focus now on whether growth can rise alongside them to help economies absorb the higher cost of money.

If payrolls come in hot and yields resume their climb, the KOSPI's oversold bounce and the Nikkei's tentative gains would likely give way to another leg lower. A soft print, by contrast, would reinforce the case that the bond rout has run its course, giving the region's chip-heavy benchmarks room to extend Thursday's recovery.

This article is for informational purposes only and does not constitute investment advice.