Asian stocks opened lower following US losses as global markets fell into a familiar, risk-off pattern with tech concerns weighing on stocks, and supporting shorter-maturity Treasuries and precious metals.
Shares in Japan and Australia dropped along with equity futures for Hong Kong. The tech-heavy Nasdaq 100 declined 1.9% Wednesday with Nvidia Corp. slipping 3.8% to its lowest since September. The S&P 500 slid 1.2% to levels not seen in three weeks, breaching its 50-day moving average.
Bitcoin was caught in the souring sentiment, falling more than 2% Wednesday, before retracing some of this week’s losses at Thursday’s open. US futures were fractionally higher after Micron Technology Inc., the largest US maker of computer memory chips, gave an upbeat forecast late Wednesday.
The heavy selling in tech was a sign investors are further questioning whether companies at the vanguard of the AI boom can keep justifying lofty valuations and ambitious spending. Concerns over the cost and viability of data center expansion, such as Oracle Corp.’s financing plans in Michigan, were fueling broader unease about the sector’s outlook.
“AI remains the market’s defining investment theme, but signs of fatigue are emerging,” said Jack Ablin at Cresset Capital Management. “Sector valuations are elevated, infrastructure spending is unprecedented, and enthusiasm mirrors past speculative cycles.”
Tech selling combined with comments from a Federal Reserve official supporting the case for interest-rate cuts to bid up two- and five-year Treasuries, popular havens. Longer-maturity Treasuries sold off, sending the 10-year yield one basis point higher to around 4.15% Wednesday.
In commodities, gold and silver soared with the latter posting one of its best daily gains of the year to reach a new high. Oil bounced off a recent low against the backdrop of escalating geopolitical risk involving Russia and Venezuela.
The sharp moves across asset classes suggested traders may be in for a busy holiday season, when thin liquidity can exacerbate market moves.
As the year draws to a close, a clearer narrative has emerged in recent weeks: the mega-cap technology stocks that have powered this bull run may be losing their ability to carry the market on their own, according to Fawad Razaqzada at Forex.com.
“Confidence in the sector is being challenged, particularly over whether stretched valuations and heavy spending on artificial intelligence can still be justified,” he said.
Traders also geared up for Thursday’s US inflation reading amid a dose of skepticism as the consumer price index runs the risk of being less reliable than usual due to government-shutdown disruptions.
In Asia, the yen edged higher early Thursday with the Bank of Japan expected to raise interest rates Friday to the highest level in three decades.
Elsewhere, New Zealand’s economy rebounded more than economists had forecast in the third quarter, with falling interest rates helping drive output after a second-quarter contraction.
Meanwhile, China Vanke Co., once the nation’s biggest homebuilder, lurched closer toward what would be one of the country’s largest-ever debt restructurings.
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