Asian stock markets declined as a surge in crude oil prices lifted US bond yields to their highest level since 2008, unsettling investors across the region.

The jump in global energy costs pushed global bond yields to their highest level since 2008, as traders raised their bets that the US Federal Reserve would lift interest rates further to contain inflationary pressure.

Rising oil prices feed into broader inflation by increasing costs for transport, manufacturing, and utilities, and higher bond yields raise borrowing costs for companies and households while making riskier assets such as equities less attractive to investors. Major Asian benchmarks including Japan's Nikkei 225, South Korea's Kospi, and Hong Kong's Hang Seng came under pressure in the session.

The 2008 reference point marks the period of the global financial crisis, when yields last stood at comparable elevated levels amid acute market stress. It also underscores how far the rate environment has shifted in the years since, as central banks moved from ultra-loose post-crisis and pandemic-era policies toward tightening cycles aimed at bringing inflation back toward target.

For Asian economies, many of which are net importers of crude, sustained higher energy costs add pressure to trade balances and currencies, which can in turn complicate central banks' policy choices between supporting growth and defending their currencies. A further escalation in energy prices or additional upward moves in US yields remain the key variables markets are watching for direction in coming sessions.

Source: CNBC-TV18