• Investors monitored bond yields during Friday's session after that of the benchmark 10-year U.S. Treasury note briefly crossed the 1.6% level, its highest level in more than a year.
• Investors also kept an eye on technology stocks in Asia-Pacific after the tech-heavy Nasdaq Composite dropped 3.52% overnight on Wall Street to close at 13,119.43 — its biggest sell-off since Oct. 28.

SINGAPORE — Stocks in Asia-Pacific fell sharply on Friday following an overnight drop on Wall Street as a rapid rise in bond yields rattled investor sentiment.

In Japan, the Nikkei 225 led losses among the region's major markets as it fell 3.99% to close at 28,966.01 while the Topix index slipped 3.21% to finish its trading day at 1,864.49. South Korea's Kospi dropped 2.8% to close at 3,012.95.

Hong Kong's Hang Seng index plunged 3.64% to close at 28,980.21. Mainland Chinese stocks also fell on the day: The Shanghai composite was down 2.12% to 3,509.08 while the Shenzhen component slipped 2.167% to around 14,507.45.

Australia's S&P/ASX 200 also saw sizable losses as it fell 2.35% to close at 6,673.30.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 3.29%.

Bond yields rise

Investors monitored bond yields during Friday's session. Overnight, the yield on the benchmark 10-year U.S. Treasury note briefly crossed the 1.6% level to trade at its highest level in more than a year.

"Yields are rising because investors are optimistic. They believe a strong sustainable recovery is right around the corner and prices will rise as demand comes roaring back.," Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a note dated Thursday.

Investor optimism about the economic outlook has risen recently on the back of factors such as positive vaccine developments as multiple major economies inoculate their populations.

Destination Wealth Management Founder and CEO Michael Yoshikami said he's "not terribly surprised" to see the 10-year Treasury yield reach the 1.5% to 1.6% level.

"I think if you start getting above two, two-and-a-quarter, okay then we start to get concerned. But frankly, I just don't see the inflationary pressure in the economy right now even with the stimulus package coming," Yoshikami told CNBC's "Squawk Box Asia" on Friday.

U.S. bond yields eased in the afternoon of Asia trading hours on Friday. The yield on the 10-year was last at 1.4719%, while the yield on the 30-year Treasury bond sat at 2.2636%. Yields move inversely to prices.

In Asia-Pacific, the yield on the Australian 10-year bond slipped to 1.834% after touching a high of 1.973% earlier. The 10-year Japanese government bond's yield also declined to 0.156%. Earlier, the yield on the 10-year JGB had risen as high as 0.181% — a level not seen since early 2016, according to FactSet.

Tech stocks drop

Investors also kept an eye on technology stocks in Asia-Pacific, which fell on Friday.

Hong Kong-listed shares of Chinese tech firms plummeted on the day: Tencent slipped 4.19%, Xiaomi fell 5.77%, Alibaba dropped 4.52% and Meituan declined 8.21%. The broader Hang Seng Tech index in the city also fell 5.71% to 8,954.44.

Japanese conglomerate SoftBank Group saw its shares plunge 4.53%. In South Korea, shares of industry heavyweight Samsung Electronics fell 3.28%.

Those losses came after the tech-heavy Nasdaq Composite dropped 3.52% overnight on Wall Street to close at 13,119.43 — its biggest sell-off since Oct. 28.

The Dow Jones Industrial Average also fell 559.85 points to finish its trading day at 31,402.01 while the S&P 500 declined 2.45% to close at 3,829.34.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.465 following a rise earlier in the week from below 90.

The Japanese yen traded at 106.04 per dollar, having weakened from levels below 105.6 against the greenback seen earlier this week. The Australian dollar changed hands at $0.7836, off levels above $0.792 seen earlier in the week.

Oil prices were lower in the afternoon of Asia trading hours, with international benchmark Brent crude futures down 1.05% to $66.18 per barrel. U.S. crude futures fell 1.2% to $62.77 per barrel.

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