Asian markets settled into an uneasy stillness after a few days of violent swings, a calm that hid how sharply investors had been jolted. A technology selloff born on Wall Street, fed by worries about borrowed money pouring into artificial intelligence and the possibility of a tougher Federal Reserve, rattled markets from Seoul to Tokyo, where chip-heavy South Korea felt the blow most. Beneath the surface, the same old tensions persist: the fragile peace with Iran, a yen sliding toward multi-decade lows, and a global economy still testing how much risk it can bear.
Asian Stocks Wobble as Tech Selloff and Debt-Fuelled AI Worries Keep Markets on Edge
Flat on the surface, the Kospi had fallen 10 per cent and bounced 2.2 in two days
Mark
The Asian index barely moved on Wednesday. Is that good news?
Mimi
Not really. A 0.02 per cent change hides the Kospi falling 10 per cent one day and rising 2.2 per cent the next.
Luke
Right, and that's the point of the analyst's remark. Flat on the surface, wild underneath.
Mark
What's driving the selloff?
Mimi
Concern about debt-funded AI spending, plus speculation the Fed turns more hawkish. Nasdaq fell 2.2 per cent.
Luke
Careful, though. Those are described as concerns and speculation. The reporting doesn't confirm that the Fed will change course or how much AI borrowing is at stake.
Mark
Why did Treasury yields fall?
Mimi
Investors sought safety in government debt, so the 10-year yield eased to 4.493 per cent.
Luke
That's the stated explanation. It fits, but it's an interpretation of investor motives.
Mark
And the yen?
Mimi
Near 40-year lows at 161.57, so intervention is a live question. The Bank of Japan has already raised rates to 1.00 per cent.
Luke
Whether Tokyo actually intervenes is unknown. Nothing here says it will.
Le Pouls
- South Korea's Kospi plunged 10 per cent in a single session, its worst day since March, as chip stocks buckled under a global tech rout.
- Seven trading days of violent swings have left analysts uneasy, with the sharp rebound of 2.2 per cent offering little reassurance that the turbulence has ended.
- Wall Street's Nasdaq fell 2.2 per cent over fears of debt-financed AI spending and a possibly more hawkish Federal Reserve, sending investors scrambling into government bonds.
- The yen hovers near 161.57 per dollar, close to 40-year lows, raising the prospect that Tokyo may step in to defend it.
- Oil prices slid toward four-month lows as stranded tankers prepare to leave the Strait of Hormuz, yet conflicting US and Iranian accounts of their peace deal leave the calm perilously thin.
Asian markets settled into an uneasy stillness after a few days of violent swings, a calm that hid how sharply investors had been jolted. A technology selloff born on Wall Street, fed by worries about borrowed money pouring into artificial intelligence and the possibility of a tougher Federal Reserve, rattled markets from Seoul to Tokyo, where chip-heavy South Korea felt the blow most. Beneath the surface, the same old tensions persist: the fragile peace with Iran, a yen sliding toward multi-decade lows, and a global economy still testing how much risk it can bear.
On Wednesday, Asian shares barely moved after a stretch of dramatic turbulence. MSCI's broad index of Asia-Pacific shares outside Japan slipped just 0.02 per cent, a number that masked how wildly the previous days had swung.
The Kospi carried the sharpest weight. South Korean shares fell 10 per cent on Tuesday, their worst single day since March, as a global retreat from technology and semiconductor stocks hit a market deeply tied to chips. They recovered 2.2 per cent the next day, while Japan's Nikkei wavered and was last down 0.8 per cent. Analyst Michael McCarthy of Moomoo Securities Australia called the past week alarming, noting that such rapid moves in either direction signal instability.
The trouble began on Wall Street. Worries about debt-funded AI spending and a possibly more hawkish Federal Reserve sent the S&P 500 down 1.4 per cent and the Nasdaq down 2.2 per cent, while investors fled into government bonds.
Oil told a different story, sliding toward four-month lows as stranded tankers prepared to leave the Gulf. But the US and Iran disagree on what their peace deal covers, including nuclear inspections and control of the strait, so the calm remains fragile. Meanwhile the yen, near 161.57 per dollar, has markets watching for possible intervention, and the Bank of Japan's latest meeting summary hinted at further rate rises. Attention now turns to whether the Kospi's rebound holds, whether Tokyo acts on the yen, and whether Washington and Tehran can reconcile their accounts.
On Wednesday, a day after one of the sharpest single-session drops in South Korea's market in months, Asian shares were barely moving. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.02 per cent, a reading that hid how violent the previous days had been.
The Kospi did the heavy lifting on both sides of that picture. South Korean shares fell 10 per cent on Tuesday, their worst one-day decline since March, as a global selloff in technology and semiconductor stocks hit a market heavily tied to chips. On Wednesday they bounced 2.2 per cent. Japan's Nikkei was less decisive, swinging between gains and losses and last down 0.8 per cent.
Michael McCarthy, a market analyst at Moomoo Securities Australia, said the price action over the past seven trading days had been alarming, and not only on the way down. When markets move this quickly in either direction, he said, it signals instability. Analysts broadly cautioned that renewed volatility remains a risk.
The trigger came from Wall Street overnight, where risk-off sentiment followed moves in Europe and Asia. US stocks fell on two worries: rising debt-funded spending on artificial intelligence, and speculation that the Federal Reserve could take a more hawkish stance. The Dow Jones Industrial Average lost 0.09 per cent, the S&P 500 fell 1.4 per cent, and the tech-heavy Nasdaq Composite dropped 2.2 per cent. Investors moved into government debt, pushing the yield on benchmark US 10-year notes down 1.41 basis points to 4.493 per cent.
Oil told a different story. Prices extended this week's losses and traded near four-month lows set in the previous session. The reason was signs that more tankers stranded in the Gulf since the start of the Iran war are set to leave the Strait of Hormuz. Yet the calm is fragile: the United States and Iran have given conflicting accounts of what their peace deal actually covers, including nuclear inspections and control of the strait itself.
Currencies added another strain. A strong US dollar has pushed the Japanese yen to around 161.57 per dollar, near 40-year lows, leaving markets watchful for a possible intervention to support it. The Bank of Japan's summary of opinions from its meeting this month, released Wednesday, showed some board members wanted further rate rises to move the policy rate closer to a neutral level. At that meeting the bank lifted its rate to 1.00 per cent, a 31-year high.
Elsewhere, the US dollar index rose 0.02 per cent to 101.43, holding near its one-year high. The euro eased 0.06 per cent to $US1.1375, and the British pound slipped 0.08 per cent to $US1.3192.
The things to watch are whether the Kospi's rebound holds, whether Tokyo steps in to defend the yen, and whether the US and Iran can settle their differing readings of the accord.
Citations marquantes
Price action over the last seven trading days has been alarming, not just when it falls, but also when it rises.— Michael McCarthy, market analyst, Moomoo Securities Australia
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