Stock Rally Stalls in Asia, Bonds Dip as Oil Gains: Markets Wrap
(Bloomberg) — Asian stocks slipped, in contrast to Wall Street’s record-setting rally, as enthusiasm over the corporate earnings outlook failed to carry over to the region. Treasuries fell as oil climbed.
MSCI’s Asia Pacific equities gauge dropped 0.6% as technology shares in South Korea and Hong Kong turned lower. The weakness contrasted with tech-led gains on Wall Street, where optimism over the sector’s earnings pushed the S&P 500 and Nasdaq 100 indexes to all-time highs ahead of the US reporting season next week.
As sentiment worsened, US equity-index futures reversed earlier gains, while those for European shares also dropped. The dollar strengthened against all its Group-of-10 peers, while Bitcoin dropped 1.6% to about $84,200.
Oil gained after Iran increased the pace of attacks on tankers in the Strait of Hormuz in recent days. Brent rose almost 1% to about $101.50 a barrel. Higher oil prices saw Treasuries drop across the curve, with benchmark 10-year yields climbing three basis points to 5.31%. French bond futures underperformed German equivalents in Asian trading as investors weighed the prospects for France’s deficits.
The weakness in Asian tech shares — often seen as the picks and shovels of the artificial intelligence buildout — contrasts with growing confidence that Corporate America can withstand elevated energy costs and higher interest rates. With the economic data calendar light, the upcoming US earnings season will test whether hundreds of billions of dollars in AI-related spending by tech giants are translating into stronger profits.
“There’s a sense that Asian markets are starting to lose some of the relative momentum they enjoyed earlier,” said Tim Waterer, chief market analyst at KCM Trade. “After a period of outperformance, the lack of fresh catalysts combined with still-elevated oil and bond yields is leaving the region looking a little tired.”
US shares continue to push higher on earnings optimism, shifting attention back to Wall Street as Asian markets move in the opposite direction, he said.
Analysts expect a roughly 25% increase in third-quarter S&P 500 profits from a year earlier, according to data compiled by Bloomberg Intelligence.
What Bloomberg’s Strategists Say…
“Asian and European equities are at risk of falling further behind US peers as the relentless AI boom spurs more money to head stateside. The ‘sell America’ narrative of early 2025 looks to have completely evaporated.”
— Garfield Reynolds, MLIV Team Leader. Click here for the full analysis.
Nvidia Corp.’s market value approached $6 trillion, underscoring the strength of the AI trade. Meanwhile, Elon Musk’s SpaceX was in talks with banks and investors to raise $40 billion of debt to buy Nvidia chips, people familiar with the matter said.
Wall Street and Asia are starting to show very different tolerance levels for higher yields, said Hebe Chen, a market analyst at Vantage Global Prime.
“In the US, a narrow group of cash-rich AI and mega-cap names still has enough earnings firepower to outrun the higher cost of capital, while in Asia higher yields bite from several directions at once — valuations, currencies, foreign capital flows and the room for central banks to ease,” she said.
In Asia, attention is also on the diverging performance of Taiwanese and South Korean stocks. The Taiex Index beat the Kospi by about 23 percentage points last quarter, the widest margin since the turn of the century.
Chip bellwether Samsung Electronics Co. is expected to report its largest-ever quarterly profit when it announces preliminary earnings on Thursday. Blowout numbers alone may not be enough to reassure investors that memory-chip demand is durable and high product prices can be locked in through long-term contracts.
While US stocks soared to records, elevated oil prices, bond yields at multi-year highs and swings in currency markets are still capturing macro traders’ attention.
“Underlying issues that have been in the driver’s seat remain unresolved,” Peter Dragicevich, a currency strategist for APAC at Corpay wrote in a note. “The backdrop points to more bursts of volatility down the track. Recent history shows the more upbeat tone in markets observed overnight may not last too long.”
Corporate Highlights:
Apple Inc.’s upcoming push into smart home devices will include a doorbell, thermostat and other accessories developed through an unusual partnership with LG Electronics Inc. Paramount Skydance Corp. closed its $110 billion acquisition of Warner Bros. Discovery Inc., completing one of the biggest media mergers of all time. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 12:58 p.m. Tokyo time Nikkei 225 futures (OSE) fell 0.7% Japan’s Topix fell 0.4% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 0.5% Euro Stoxx 50 futures fell 0.6% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.2% to $1.1238 The Japanese yen fell 0.2% to 158.41 per dollar The offshore yuan was little changed at 6.7042 per dollar Cryptocurrencies
Bitcoin fell 1.7% to $84,150.06 Ether fell 3.2% to $2,611.1 Bonds
The yield on 10-year Treasuries advanced three basis points to 5.30% Australia’s 10-year yield was little changed at 5.40% Commodities
West Texas Intermediate crude rose 0.9% to $90.22 a barrel Spot gold fell 0.5% to $4,143.94 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Ruth Carson.
©2026 Bloomberg L.P.
