Asian stocks dip after Wall Street rally stalls

The Nikkei-225 index fell 0.2% with losses in Australia and Taiwan.

Asian stocks slipped after losses on Wall Street as signs of fatigue crept into the AI-fueled equity rally.

The Nikkei-225 index fell 0.2% with losses in Australia and Taiwan. The S&P 500, Nasdaq 100 and a gauge of global stocks all dropped for a second consecutive day Wednesday. A gauge of the dollar gave up some of its gains from the prior session while oil steadied following its biggest jump since July. Treasury yields were little changed after rising across the curve in US trading.

An index of US-listed Chinese companies rallied against the downcast mood on Wall Street to climb 2.8%, with Alibaba Group Holding Ltd. jumping 8.2%. Equity-index futures for Hong Kong retreated as the city returns to normalcy after Super Typhoon Ragasa. Insurance claims from the typhoon can be $50 million to $100 million, according to Bloomberg Intelligence.

Investors in Asia will also focus on the sale of 40-year Japanese government bonds Thursday.

The retreat on Wall Street signaled a breather for an AI-driven surge that has already lifted the S&P 500 about 12% this year as investors rushed to names like Nvidia Corp. That momentum appeared to dissipate Wednesday as traders awaited fresh catalysts amid risks stemming from a labor-market slowdown to sticky inflation.

“Timeout called,” said Craig Johnson at Piper Sandler. “The trend of strong gains isn’t over yet. However, the short-term risk-reward profile is becoming more compressed as stocks extend higher while underlying momentum fades.”

Policy risks were also weighing on markets. The administration launched investigations into imports of robotics, industrial machinery and medical devices, a sign President Donald Trump may expand his tariff regime.

South Korea’s prime minister warned that major investment projects in the US will stall until visa issues are resolved, urging Washington to reassure Koreans worried about detentions.

Elsewhere, Federal Reserve Bank of San Francisco President Mary Daly said further interest-rate cuts are likely needed, but the US central bank should approach those with caution.

While the S&P 500 has defied September’s gloomy reputation as the worst month for equity returns, the gauge failed to gain traction on Wednesday, sparking concerns the rally has hit an air pocket.

At Bank of America Corp., Savita Subramanian noted that on 19 of 20 metrics, the US equity benchmark is trading at statistically expensive levels.

“In theory, investors pay up for predictable assets and are compensated for uncertainty. Perhaps we should anchor to today’s multiples as the ‘new normal’ rather than expecting mean reversion to a bygone era,” Subramanian at BofA said in a note.

In commodities, copper prices soared after Freeport-McMoRan Inc. said force majeure was declared on contracted supplies from its giant Grasberg mine in Indonesia. Gold fell 0.7% Wednesday as oil climbed for a second day.