Asian shares decline, gold trades below $4,000

US stocks slipped Thursday as investors took a breather following a strong rally in the S&P 500 from its April lows

Asian equities fell amid concern that valuations in technology companies have become stretched after their relentless surge.

The MSCI Asia Pacific Index dropped 0.6% with semiconductor shares dragging Japan lower. Hong Kong also retreated while South Korean shares rose as Samsung Electronics Co. jumped 6% to trade above its record closing high.

The dollar steadied after a four-day rally took it to the strongest since the beginning of August. Gold edged up after falling the most since August, still trading below the $4,000 mark. Oil held the biggest decline in a week on cautious optimism about easing tensions in the Middle East.

US stocks slipped Thursday as investors took a breather following a strong rally in the S&P 500 from its April lows, when tariff concerns rattled markets. Gains in stocks have been spurred on by large tech stocks linked to artificial intelligence, leading some analysts to suggest a bubble has been forming.

“Some areas of the market appear overheated,” said Keith Lerner at Truist Advisory Services Inc. “The extended stretch without a meaningful pullback leaves the market more sensitive to negative surprises.”

Even after a series of records to all-time highs, stock positioning data from JPMorgan Chase & Co. suggested some investors including hedge funds are holding back.

The equity beta of monthly reporting macro hedge funds — an indicator of their exposure — remains modestly negative despite becoming slightly less so in recent months, the team led by Nikolaos Panigirtzoglou said.

One of the main reasons the AI bubble talk is misplaced is that the leading spenders continue to enjoy increased earnings power, according to Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.

“These aren’t the dot-com companies of a quarter-century ago that didn’t have earnings, or even viable business models,” he said. “That doesn’t mean the market won’t have setbacks, though. Investors may want to take a look at quality dividend-growth stocks.”

Elsewhere, the Bureau of Labor Statistics recalled staff to prepare a key inflation report that is necessary to calculate the size of next year’s Social Security checks, according to a Labor Department official with knowledge of the matter.

The BLS had suspended all operations, including data collection and the production of economic statistics, as a result of the government shutdown.

In other corners of the market, Treasuries fell across the curve Thursday. The yen headed for its biggest weekly loss in a year even as Japan’s new ruling-party leader Sanae Takaichi, a pro-stimulus lawmaker, said she wasn’t in favor of an excessively weak currency.

The Argentine peso rebounded after the US rushed to stabilize the country’s economy, offering $20 billion in financing and carrying out a rare intervention in currency markets after weeks of sharp declines.

Investors are also focused on the recent strength of the dollar.

The world’s primary reserve currency is around a two-month high, even as the US government shutdown drags on, and traders in Asia and Europe say hedge funds are adding options bets that the rebound versus most major peers will extend into year-end.

“While further dollar upside may be limited without a notable rise in real yields, another leg higher in US Treasury yields could spark broader risk-asset corrections,” wrote Dilin Wu, a strategist at Pepperstone Group.