Asian Stocks Decline in Break From US Chip Rally: Markets Wrap

(Bloomberg) — Asian stocks dropped, diverging from a chip-led rally on Wall Street, as sentiment toward the artificial intelligence trade remained jittery ahead of key earnings this week that will test the strength of gains in the technology sector.

The MSCI Asia Pacific Index fell 0.8%, with nine of its 11 subgroups in the red and two shares declining for every one that gained.

Regional losses were led by a 2.7% drop in South Korea’s Kospi Index — a bellwether for AI investments — as chip heavyweight SK Hynix Inc. headed for its lowest close since April. Also weighing on the mood, data-center infrastructure company Elice Inc. plunged as much as 33% in its trading debut in Seoul.

“There is a touch of buyer exhaustion, but also some skepticism with big earnings out over the next few days,” said Josh Gilbert, lead analyst for Asia Pacific and Middle East at eToro Ltd. The “ugly debut” of Elice “hasn’t helped the dynamic in Asia today.”

Elsewhere, Treasuries broadly held their losses from Monday, when reduced haven demand pushed yields higher. The yield on the benchmark 10-year US note was at 5.13% after climbing seven basis points in US trading. French bonds also declined following violent unrest over the weekend.

The AI trade faces a fresh test this week as earnings from major technology companies, including Meta Platforms Inc. and Tesla Inc., offer clues on whether the rally has further room to run after concerns over heavy spending and higher interest rates rattled the sector. The backdrop also remains challenging, with elevated bond yields raising financing costs and oil prices adding to inflation concerns.

“The relief rally seen in US tech stocks overnight is failing to carry through to Asia,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc. “Investors are still in risk off mode, with rising bond yields and sticky energy prices being a key concern. Questions also continue to linger over the durability of the AI asset boom, with higher funding costs risking project delays or even cancellations.”

On Monday, the Philadelphia Semiconductor Index climbed 1.6%, snapping an eight-day losing streak that was its longest since 2008.

The rally in tech stocks helped the Nasdaq 100 Index recover from its worst week since the tariff turmoil of April 2025.

While chip stocks rebounded on Wall Street and the US benchmarks rose on Monday, about 65% of stocks on the S&P 500 Index declined.

“The rebound was driven primarily by technology stocks rather than a broad-based return of risk appetite,” Dilin Wu, a strategist at Pepperstone Group Ltd., wrote in a note.

Elsewhere in Asia, China’s central bank signaled that its overnight reverse repurchase rate would replace the current seven-day rate as its policy benchmark, another step toward aligning its framework with global peers that may help lower borrowing costs.

In other corners of the market, gold slipped 0.6% to about $4,116 an ounce. Global crude benchmark Brent was steady near a five-month high as traders weighed the risk of further Iranian attacks in the Strait of Hormuz against robust crude flows from the Persian Gulf. The commodity traded at $109.80 a barrel.

A Bloomberg gauge of the dollar’s strength edged lower.

“Investors are also reluctant to take large positions ahead of earnings from key tech companies,” said Carol Kong, a strategist at Commonwealth Bank of Australia. “With risk sentiment and the global growth outlook now closely tied to the AI trade, investors are likely waiting for those results before reassessing their positions on the US dollar.”

The euro is also on traders’ radars amid rising eopolitical risks in France.

French officials rolled out tougher security measures and pledged aid for businesses after cost-of-living protests over the weekend degenerated into violence, vandalism and looting. But a debt mountain and a budget deficit among the largest in the euro area mean the French government cannot simply increase spending to appease the public.

“Euro bulls are scarce these days,” Thomas Hempell, head of macro and market research at Generali Investments, wrote in a note. “With the war in Iran dragging on and French politics unresolved, a near-term euro rebound looks unlikely.”

Corporate Highlights:

Apple Inc. confirmed that it’s holding a product launch event on Oct. 28, where the company is planning to debut its first touch-screen MacBook. Nscale Ltd. was said to be in talks on a $45 billion computing deal with Anthropic PBC. National Australia Bank Ltd. is cutting up to 2,500 roles across its workforce to reduce duplication and speed up decision making, and said it will also use fewer consultants and contractors. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 10:56 a.m. Tokyo time Nikkei 225 futures (OSE) fell 0.7% Japan’s Topix fell 0.9% Australia’s S&P/ASX 200 fell 0.7% Hong Kong’s Hang Seng fell 1.1% The Shanghai Composite fell 0.3% Euro Stoxx 50 futures fell 0.6% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1219 The Japanese yen was little changed at 158.56 per dollar The offshore yuan was little changed at 6.6788 per dollar Cryptocurrencies

Bitcoin fell 0.2% to $81,722.96 Ether was little changed at $2,398.95 Bonds

The yield on 10-year Treasuries declined one basis point to 5.13% Japan’s 10-year yield advanced one basis point to 2.915% Australia’s 10-year yield advanced four basis points to 5.26% Commodities

West Texas Intermediate crude rose 0.1% to $103.77 a barrel Spot gold fell 0.3% to $4,126.34 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Faseeh Mangi, Aya Wagatsuma, Ruth Carson and Matthew Burgess.

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