Asian Stocks Drop on Chipmakers, Gold Extends Gain: Markets Wrap

(Bloomberg) — Asian stocks slipped as renewed weakness in chipmakers weighed on broader market sentiment, tempering risk appetite across the region. Oil mostly held its previous losses as traders monitored efforts to reopen the Strait of Hormuz.

South Korea’s Kospi Index tumbled over 4% with SK Hynix Inc. and Samsung Electronics Co. leading the losses. Chip stocks remained in focus with memory maker Sandisk Corp. sliding 8% and rival Western Digital Corp. plunging 12% in post-market trading after reporting earnings. As sentiment soured, futures for the Nasdaq 100 Index erased earlier gains and dropped 0.3%.

“Investors are increasingly asking what incremental catalysts are needed to remain in the Asia memory trade,” said Gary Tan, a portfolio manager at Allspring Global Investments. “Investors may increasingly look further along the AI value chain where earnings upgrades and re-rating potential are less fully reflected in share prices.”

Losses in South Korea and Japan pushed the MSCI Asia Pacific Index down 1.3%. Investors will get a fresh read on the artificial intelligence trade Thursday when SoftBank Group Corp. reports earnings. About $101 billion of SpaceX shares will also become available for trading.

Elsewhere, Brent fluctuated to trade near $80 a barrel after Iran said it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz, a potential step toward reopening the critical waterway. The dollar held its losses from the previous session, while gold climbed to around $4,300 an ounce after posting its biggest gain since February.

The pause in the tech-led rally came as investors reassessed valuations after AI-related shares rebounded sharply from last month’s bruising selloff, which hit several hedge funds. Traders are also focused on developments in the Middle East for clues on the direction of oil prices, with knock-on effects for inflation and interest-rate policies of central banks.

Chipmakers have had a volatile month as even robust earnings from companies failed to impress investors, sending shares plunging. Dip buyers then emerged to offer a reprieve.

The MSCI World Semiconductor Index had tumbled more than 20% from its peak in June, driven by worries around the sustainability of the AI spending boom and progress in China’s advanced chipmaking. The gauge has rebounded around 15% since then.

Last week, Leopold Aschenbrenner’s Situational Awareness nearly buckled under a barrage of margin calls from lenders across Wall Street. He ultimately reached a deal with Ken Griffin’s Citadel to offload the bulk of his public stock portfolio.

“The hedge-fund ‘bailout’ provided some short-term support to technology stocks, but it did little to resolve the underlying questions: how much capital will ultimately be deployed, how serious the competitive challenge from Chinese AI companies will become and which companies will capture the economic returns,” said Rajeev de Mello, global macro portfolio manager at Gama Asset Management. “Until there is greater clarity on those issues, the sector is likely to remain volatile.”

Elsewhere, global bond and currency investors are debating if it’s time to dust off last year’s ‘Sell America’ trade after a flurry of economic-policy decisions out of Washington over the past two weeks.

With fiscal concerns, a trade war and the ongoing conflict in the Middle East also threatening to underpin inflation, some in markets are starting to reassess their taste for US bonds and the dollar amid concern that US policy is again becoming hard to decipher.

Meanwhile, data showed the US services sector expanded at a steady pace in July, even as higher costs for labor and materials continued to weigh on businesses. Hiring slowed, with companies adding fewer workers than expected.

If Friday’s monthly payrolls report confirms signs of a cooling labor market, it may give Federal Reserve officials room to keep their focus on stubborn inflation, rather than employment.

Even so, some policymakers continued to signal they are prepared to tighten policy further if price pressures persist.

Minneapolis Fed President Neel Kashkari told CNBC the central bank should begin raising interest rates incrementally now, while Governor Lisa Cook said she was prepared to act if inflation failed to keep slowing.

“With tomorrow’s US employment report also firmly in focus, we could see markets settle into quieter, rangebound conditions if the geopolitical headlines remain relatively subdued,” wrote Nick Twidale, chief market analyst at AT Global Markets. “However, given the current sensitivity to developments in the Middle East, any unexpected headline could quickly change that dynamic.”

Corporate Highlights:

Alphabet Inc.’s Google is losing some of its most prominent artificial-intelligence veterans in a seismic overhaul that is casting doubt over leadership of a critical area of growth right as competition intensifies. DBS Group Holdings Ltd. reported second-quarter profit that beat expectations, powered by a surge in wealth-led fee income, and raised its 2026 guidance. Qantas Airways Ltd. international pilots voted in favor of potential strikes as part of years-long negotiations over pay and conditions. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 10:49 a.m. Tokyo time Nikkei 225 futures (OSE) fell 1.8% Japan’s Topix fell 0.3% Australia’s S&P/ASX 200 rose 0.6% Hong Kong’s Hang Seng fell 1.6% The Shanghai Composite rose 0.1% Euro Stoxx 50 futures were little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1555 The Japanese yen was little changed at 157.66 per dollar The offshore yuan was unchanged at 6.7482 per dollar The Australian dollar was unchanged at $0.7058 Cryptocurrencies

Bitcoin fell 0.3% to $64,592.84 Ether fell 0.4% to $1,907.39 Bonds

The yield on 10-year Treasuries was little changed at 4.61% Japan’s 10-year yield declined three basis points to 2.775% Australia’s 10-year yield advanced one basis point to 4.92% Commodities

West Texas Intermediate crude rose 0.7% to $75.78 a barrel Spot gold rose 1.1% to $4,294.46 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Momoka Yokoyama, Alice French, Winnie Hsu, Faseeh Mangi and Kurt Schussler.

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