Asian Stocks Drop After AI Jitters Hit Wall Street: Markets Wrap

(Bloomberg) — Asian equities retreated from a record as fresh concerns over the impact of artificial intelligence on various sectors pressured US technology stocks and spurred a flight to the safety of Treasuries.

The MSCI Asia Pacific Index dropped for the first time in six sessions with losses in Japan, while South Korean stocks edged a little higher. That came after the S&P 500 fell 1.6% and the Nasdaq 100 dropped 2% Thursday with megacaps slumping. The downdraft spread to areas including logistics and commercial real estate, in a sign investors are worried about the impact of AI.

Even so, some signs emerged in early Asian trading that markets may be able to find a foothold after the recent volatility with US equity-index futures edging up. Gold steadied on Friday after slumping 3% in its previous session with algorithmic traders appearing to amplify the precious metal’s sudden drop. Bitcoin edged higher after four days of losses.

The cross-asset weakness sent investors to the perceived safety of US Treasuries, which rallied across the curve on Thursday. That pushed the US two-year yield five basis points lower and the 10-year down seven basis points to 4.1%.

The sharp swings in US trading reflected the rising stakes tied to the AI boom and the unpredictable ripple effects across sectors, regions and asset classes. The moves highlighted how quickly shifts in sentiment around AI can reverberate far beyond the technology sector, with precious metals tumbling and traders plowing money into Treasuries.

“Software stocks are now trading like banks in 2008,” said Nick Ferres, chief investment officer of Vantage Point Asset Management in Singapore, referring to the global financial crisis. “Asia has performed well so far this year, but I am concerned about correlation to global markets and a tactical unwind,” he said.

Later Friday, January US inflation data is due, with the median forecast predicting a year-over-year increase of 2.5% for the core consumer price index, which strips out food and energy.

Traders continued to assign little chance that Federal Reserve officials will lower rates when they meet next in March, with a July cut fully priced in.

Markets are complacent on the outlook for US inflation, making trades that pay out if price pressures climb look attractive, said Benjamin Wiltshire at Citigroup Inc. Investors may be underestimating the resilience of the US consumer and market expectations for inflation are likely to be revised slightly higher, he noted.

“Markets seem to have this conviction that inflation is going to come down,” Wiltshire said in an interview. “We’re still in a structurally higher inflation environment.”

In commodities, oil slid as risk-averse sentiment pervaded global markets and investors digested fresh developments in US-Iran tensions that continue to cloud the supply outlook.

Despite the bearishness, there were pockets of good news for US stocks. Applied Materials Inc. surged 10% in late trading after delivering a surprisingly upbeat sales forecast, signaling that demand for artificial intelligence and memory semiconductors is fueling equipment purchases.

Anthropic, meanwhile, completed a deal to raise $30 billion in funding from investors at a $380 billion valuation, including the money raised. Elsewhere, OpenAI has warned US lawmakers that its Chinese rival DeepSeek is using unfair and increasingly sophisticated methods to extract results from leading US AI models, according to a memo reviewed by Bloomberg News.

In trade developments, the US and Taiwan finalized an agreement to lower tariffs, boost market access for American products in Asia and direct billions of dollars into US energy and technology projects.

Corporate Highlights:

Clear Street Group Inc., a Wall Street broker built on cloud computing technology, has postponed its US initial public offering after cutting the target by nearly two- thirds. OpenAI is releasing its first artificial intelligence model that runs on chips from semiconductor startup Cerebras Systems Inc., part of a push by the ChatGPT maker to broaden the pool of chipmakers it works with beyond Nvidia Corp. Westpac Banking Corp.’s first-quarter profit advanced amid gains in home loans and strong growth in institutional lending. CK Hutchison Holdings Ltd. has warned A.P. Moller-Maersk A/S of legal action should the Nordic company’s terminal unit try to take over operations at two ports near Panama’s strategic canal. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 9:01 a.m. Tokyo time Hang Seng futures fell 1% Japan’s Topix fell 0.4% Australia’s S&P/ASX 200 fell 1% Euro Stoxx 50 futures fell 0.6% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1869 The Japanese yen was little changed at 152.83 per dollar The offshore yuan was unchanged at 6.8981 per dollar The Australian dollar was little changed at $0.7089 Cryptocurrencies

Bitcoin rose 0.6% to $66,205.32 Ether rose 1.2% to $1,945.98 Bonds

The yield on 10-year Treasuries was unchanged at 4.10% Australia’s 10-year yield declined eight basis points to 4.72% Commodities

West Texas Intermediate crude was little changed Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.

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