Japan's Nikkei index slipped 0.3% by Friday midday and is on track for about a 4% weekly decline, its largest weekly fall since the week ending July 17, as uncertainty around the Middle East conflict pushed oil higher and heightened inflation concerns. The broader TOPIX fell 0.1% and is set for a roughly 3.4% weekly drop. Nomura strategist Maki Sawada said profit-taking is likely into the weekend as oil and bond yields rise amid Middle East uncertainty.

Japan's 20-year government bond yield rose 6 bps to 3.77%.

Oil and U.S. benchmark Treasury yields rose, and investors bet Treasury measures to curb borrowing costs may only provide short-lived relief, leaving Asian shares set to follow U.S. weakness on Friday. The U.S. Treasury may expand long-term bond repo operations and is poised to unveil a new fiscal plan, but the 30-year Treasury yield still climbed. The S&P 500 closed down 0.9%, with Walmart plunging after sales missed expectations in its largest drop since 2022; the Nasdaq 100 fell 0.7% for a fifth straight session. Index futures signalled likely lower opens in Japan, South Korea and Australia, while U.S. futures were largely flat in early trade.