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Mainland China and Hong Kong stocks fell on Thursday, hurt by worries about the Chinese economy, but an overnight tumble in longer-dated U.S. Treasury yields lent support to other benchmark indexes.
A 0.78% drop for Hong Kong and a 0.36% decline for blue chips in mainland China pulled MSCI's broadest index of Asia-Pacific shares outside Japan 0.22% lower.
But share benchmarks in Australia and Korea were up, while Japan's Nikkei rose 0.81%. Nasdaq futures gained 0.6% and S&P500 futures advanced 0.4%.
The 10-year yield was last at 2.8455%, a whisker higher in Asia morning trade, but still bruised after falling overnight from as high as 2.981% in early trade on Wednesday.
"I think we're still heading towards 3% for 10-year treasuries, I think it was a little bit of profit-taking," said Rob Carnell, head of research for the Asia Pacific at ING.
Carnell said the fall in bond yields may have provided some support for equities overnight, with the S&P500 broadly flat on the day despite an uglier picture for tech.
He added that "equity futures look positive, with Asian markets also showing some signs of positive risk appetite for the near term."
The tech-heavy Nasdaq fell 1.22%, dragged down by Netflix (NASDAQ: NFLX) which plunged 35.1% after reporting a surprise decline in subscribers. The blue-chip Dow rose 0.71%.
China was a focus for investors again, after surprising markets on Wednesday by keeping benchmark lending rates unchanged, despite frequent government pledges to support a slowing economy hit by its worst COVID-19 outbreak in two years.
China's central bank, however, set the midpoint rate for the yuan at its weakest since November on Wednesday, ahead of the lending rate announcement. It also set it to lower still on Thursday.
"The CNY fixing reflected an admission that things aren't going brilliantly in China, and they need a bit more support, but they've been holding off from doing that with interest rates.
They don't want to drive the yuan much weaker than they want it to be, but they've decided to take back some recent strength," said Carnell.
Lower yields sent the dollar lower, with the dollar index tumbling 0.65% on Wednesday as the beaten-down euro and sterling managed to recover a little ground.
The dollar index was last at 100.44, down from a near two-year peak the previous day of 101.03.
The dollar gained 0.38% on the yen to 128.3 in early trading on Thursday, however, the yen's recovery on Wednesday - its first session of gains against the dollar in nearly two weeks - proved short-lived.
The yen has been hurt by the Bank of Japan keeping yields pinned down low while rates rise in the United States.
Sanjaya Panth, deputy director of the IMF's Asia and Pacific Department told Reuters late on Wednesday said there was no need for Japan to shift course.
"The yen's recent declines have been driven by fundamentals and would be no reason for Japan to change its economic policy, including the central bank's ultra-low interest rates," Panth said.
Oil climbed again in early trade on Thursday after a mixed few days with Brent crude futures up 0.67% to $107.48 a barrel, and U.S. crude up 0.54%.
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Analysts at ANZ said investors were weighing potential supply disruptions against demand prospects.
"The IMF global growth downgrade due to the Ukrainian crisis is clouding oil demand prospects... On the other hand, pressure is mounting on Europe to impose sanctions on Russian oil." - investing
