Asian equities broadly advanced on Thursday, buoyed by a pullback in global bond yields and a stabilization in oil prices following three consecutive days of gains. Market anxiety subsided after U.S. President Donald Trump downplayed the likelihood of a prolonged conflict with Iran. Concurrently, a notable strengthening of the Japanese yen fueled speculation that authorities might intervene in the currency market.

The MSCI Asia-Pacific index climbed 1.1%, bouncing back from Wednesday's selloff. Chip-related stocks, including SK Hynix, led gains, supported by optimistic revenue guidance for the next two years from Broadcom. European markets opened with a mixed tone, with Germany's DAX edging up 0.04% and Nasdaq 100 futures ticking up 0.2%.

Prices for Brent crude eased slightly to just below the $95.40 mark. Trump indicated that U.S. military actions against Iran could be brief and reiterated American control over the Strait of Hormuz. The softer oil price reduced selling pressure in the Treasury market, allowing U.S. government bonds to extend the previous session's gains, with the 10-year yield holding steady near 4.77%. Investor attention has now shifted to Friday's U.S. non-farm payrolls report for clues on the Federal Reserve's policy trajectory.

Natalia Lojevsky, managing director at CIFC Asset Management, noted in a report that "there are multiple unanswered questions and conflicts, without a clear timeline for resolution on any of them," urging investors to exercise caution when entering the market. She also warned that "at some point, persistently higher yields will cause tangible pain for equities."

European benchmarks opened with slight divergences: the UK's FTSE 100 gained 0.12%, France's CAC 40 dipped 0.01%, and the Euro Stoxx 50 rose 0.05%.

Japan's Nikkei 225 closed down 0.2% at 64,214.48 points, while the broader Topix index finished 0.5% higher at 4,102.04 points. South Korea's KOSPI composite index closed up 0.26% at 6,579.48 points.

The yen strengthened for a second consecutive session, rallying to as high as 157.63 per dollar, a three-week peak. The dollar index dipped 0.2% for the second day running. The U.S. 10-year Treasury yield was little changed at 4.77%. A solid auction of 30-year Japanese government bonds drove that yield down 10 basis points to 4.065%, while the 10-year JGB yield slipped 4 basis points to 2.970%. Gold rose 1.2% to around $4,430 an ounce, and Brent crude was down 1.0% on the day at $94.67 per barrel, with WTI falling 1.5% to $89.62. London copper prices were within $300 per ton of the record high set in January.

Yen Surge Heightens Intervention Watch

Markets remain on high alert for possible intervention by Japanese authorities as the yen hit a three-week high of 157.63 per dollar on its second day of gains. Japan's Ministry of Finance conducted currency intervention in July. According to Bloomberg, the yen's appreciation was partly triggered by algorithmic trading. Chris Weston, head of research at Pepperstone Group Ltd., commented in a note: "Clearly, this is not a full-scale intervention, given the relatively contained volatility, but certain factors did activate algorithmic programs."

Behind the yen's move is growing market speculation that the Bank of Japan (BOJ) could tighten policy this month. After a BOJ board member earlier this week floated the possibility of an unconventional or back-to-back rate hike, overnight index swaps have fully priced in a 25-basis-point hike at the September meeting, though the probability of a more aggressive 50-basis-point move is still seen as quite low. Meanwhile, the strong demand at the 30-year JGB auction saw yields drop from 4.065%. The 10-year benchmark yield also retreated from Wednesday's high of 3.015%, a level not seen since 1996, to hover around 2.97%.

Rate Hike Bets Intensify, Jobs Data in Spotlight

Since the start of September, global bond yields have surged alongside the renewed U.S.-Iran conflict, with inflation concerns and expectations of Fed rate hikes both climbing, leading to volatile trading this week. According to CME Group's FedWatch tool, markets currently price in about a 67% probability of a 25-basis-point rate hike this month, up significantly from 37% a week ago.

New York Fed President John Williams attempted to temper those expectations on Wednesday, stating that the rise in long-term Treasury yields reflects a solid economic foundation and emphasized the need for more data before making any rate decisions. Additionally, Fed Governor Christopher Waller, who indicated in July that further rate increases might be necessary in the near term, is scheduled to speak at a Reuters NEXT event in Washington on Thursday. Wednesday's ADP employment data came in below expectations, but the market is more focused on the official non-farm payrolls report due Friday. The consumer price index (CPI) data on September 11 will be the next major data point.

Tech Leads Gains, Mixed Performance Across Asia

Jason Lui, head of Asia-Pacific equity derivatives strategy at BNP Paribas, noted: "Asian markets are seeing a modest recovery from yesterday's selloff, with semiconductor and AI-related stocks rebounding on the back of overnight optimistic guidance from U.S. tech companies."

Japan's Topix index rose 1%, with Mitsubishi Corp. gaining nearly 5% to lead the trading house sector. This followed comments from Greg Abel, CEO of Berkshire Hathaway B, who reiterated the group's long-term commitment to Japanese investments and hinted at possible further increases. South Korea's KOSPI, which had surged as much as 1.5% earlier, pared gains to trade flat. Singapore's Straits Times Index rose 0.7%, and Australia's S&P/ASX 200 gained 0.5%.

Mixed Commodity Signals: Oil Retreats, Gold Advances

Brent crude slipped about 0.95% to near $95.40 after three days of gains, directly influenced by Trump's comments on the Iran situation. This easing in oil prices has slightly alleviated the inflation and rate-hike concerns triggered by high energy costs. Gold climbed 1.2% to around $4,430 an ounce, reflecting sustained safe-haven demand. European natural gas futures rose for a fourth consecutive day, approaching their highest closing level since early 2023. Base metals were broadly firmer, with London copper trading within $300 of its January record high. The Bloomberg Dollar Spot Index declined 0.2% for a second straight day.