Chip Selloff Extends to Asia, Treasuries Stabilize: Markets Wrap

(Bloomberg) — Asian stocks dropped as a semiconductor selloff deepened, with investors retreating from one of the year’s hottest trades amid elevated bond yields and geopolitical uncertainty. Treasuries stabilized after recent losses.

MSCI’s Asia Pacific equities benchmark slid 1.6%, with shares in South Korea dropping 5.5%. Chip bellwethers Samsung Electronics Co. and SK Hynix Inc. both declined around 7%, tracking a selloff in semiconductor stocks on Wall Street. Kioxia Holdings Corp. plunged around 10% in Tokyo.

Treasuries steadied following a global bond selloff that had sent 10-year US yields to near the highest levels since early 2025 and the 30-year to levels last seen in 2007. Yields on the benchmark 10-year fell one basis point to 4.70% Wednesday. Bonds in Australia and New Zealand edged up.

Elsewhere, oil rose for a fourth day, with no sign of progress toward a resolution of the US-Iran war after almost six months of conflict. Brent traded above $91 a barrel, after adding 4.5% over the previous three sessions, while West Texas Intermediate was near $85.

“With the outlook for the Middle East remaining uncertain and yields staying elevated, markets are likely to remain in risk-off mode today,” said Kazunori Tatebe, chief strategist at Daiwa Asset Management. “Higher yields will increase borrowing costs for hyperscalers, raising questions about the outlook for capital spending and the potential impact on AI infrastructure companies.”

Technology stocks, seen as a long-term growth bet, came under pressure as bond yields hovered near multi-decade highs amid persistent inflation, heavy government spending and a flood of debt issuance. Geopolitical turmoil added to the strain by raising the risk of energy-driven supply shocks that could keep inflation and borrowing costs elevated for longer.

The US 30-year yield touched 5.34% Tuesday before retreating slightly to 5.28% at the close and remained little changed on Wednesday.

Widening credit spreads, rising interest rates and a surge in supply all contributed to a softer high-grade funding backdrop Tuesday, prompting at least seven issuers to decide against announcing bond deals to the market.

“Long-duration bonds remain exposed to heavy issuance, persistent fiscal deficits, and resilient nominal growth,” wrote Thomas Poullaouec, a portfolio manager at T. Rowe Price that oversees more than $1.8 trillion in assets. “With corporate balance sheets healthy, capital markets open, and investor positioning not excessively bullish, we believe equities offer a better balance of upside participation and relative risk.”

Investors are also reassessing the outlook for US monetary policy, with just over a third of traders now pricing in a Federal Reserve rate increase, up from last week.

Minutes from the Fed’s latest meeting are due Wednesday and may offer clues on policymakers’ thinking at a time when Chairman Kevin Warsh has scaled back communications.

“Markets are worried about, what’s the reaction function of the Fed?” Kay Herr, US chief investment officer for JPMorgan’s global fixed-income, currency, and commodities team, said on Bloomberg Television. “The market doesn’t really love the fact that we don’t have forward guidance,” Herr added, referencing the rally in yields.

Meanwhile, Middle East tensions intensified after the United Arab Emirates said two ballistic missiles fired from Iran toward the country fell into the sea, marking the Islamic Republic’s first known attack on the Gulf nation since May as the wider conflict dragged on.

“The Middle East uncertainty keeps the market on edge,” said Dan Pan, Americas economist at Standard Chartered. “Inflation risks have piled up on top of fiscal concerns, driving up US long-term yields. Risk sentiment generally remains cautious.”

Corporate Highlights:

Anthropic PBC’s revolving credit facility is set to rise above its roughly $10 billion target, according to people familiar with the matter, as the artificial-intelligence firm prepares for a highly anticipated initial public offering. Baidu Inc.’s revenue fell for a fifth consecutive quarter, reflecting a weakening position in ads as well as AI development against rivals like Moonshot. Xiaomi Corp. posted its third consecutive profit decline. Home Depot Inc.’s earnings beat expectations, signaling strength despite a housing market that’s weighed down by high home prices and interest rates. The shares still slipped 0.1%. Some of the main moves in markets:

Stocks

S&P 500 futures were unchanged as of 9:49 a.m. Tokyo time Hang Seng futures fell 0.3% Nikkei 225 futures (OSE) fell 2.5% Japan’s Topix fell 2.3% Australia’s S&P/ASX 200 fell 0.3% Euro Stoxx 50 futures were little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1575 The Japanese yen was little changed at 159.47 per dollar The offshore yuan was little changed at 6.7474 per dollar The Australian dollar fell 0.1% to $0.7079 Cryptocurrencies

Bitcoin was little changed at $64,535.22 Ether was little changed at $1,913.74 Bonds

The yield on 10-year Treasuries was little changed at 4.70% Japan’s 10-year yield declined 1.5 basis points to 2.920% Australia’s 10-year yield declined four basis points to 5.06% Commodities

West Texas Intermediate crude rose 0.8% to $85.65 a barrel Spot gold rose 0.2% to $4,342.81 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Momoka Yokoyama and Ruth Carson.

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