Global AI Trade Under Pressure, Oil Extends Rally: Markets Wrap
(Bloomberg) — The artificial intelligence trade stayed on the back foot as investors rotated out of one of the year’s hottest themes and sought safety in bonds. Adding to the pressure, crude oil extended its gains.
Following a rout in chip stocks Thursday on Wall Street, semiconductor and other tech shares retreated in Asia, pushing the MSCI Asia Pacific equities gauge lower by 0.4% and set for its lowest close since late July. The Kospi Index in South Korea declined 0.8%.
Stocks appeared to find some footing as regional benchmarks pared declines and recovered from session lows. Nasdaq 100 futures also edged up 0.1% after swinging between gains and losses earlier. European shares were also set for a flat open.
The rout in the AI trade this week drove investors toward the safety of bonds, sending bond yields in the US and Japan lower. Treasuries held the previous session’s gains after staging their biggest rally in more than two years. The benchmark 10-year yield, which fell 17 basis points Thursday, traded at 4.96%. Government debt in Japan and Australia also advanced.
While the yen, historically a haven asset in times of crisis, was little changed Friday at about 156.90 per dollar, the currency gained in each of the past three days.
Little relief came in the energy markets after global crude oil benchmark Brent rose 0.4% to $113.65 a barrel, extending a 4% jump in the previous session. Oil rallied Thursday as deadly attacks in Saudi Arabia heightened concerns over supplies.
Technology stocks that powered a four-year bull run in US equities bore the brunt of the selling as earnings from megacap companies added to concerns their rebound since late March had gone too far, too quickly. The group faces fresh tests next week with results from Microsoft Corp., Amazon.com Inc. and Alphabet Inc. landing, alongside the Federal Reserve’s policy decision.
“The equity market is increasingly pricing in the risk that the AI boom or bubble is coming to an end,” said Tomoichiro Kubota, chief market analyst at Matsui Securities Co. “It may be that the AI bubble has started to burst. There had already been concerns about how AI companies would fund their investments, and falling share prices could make it even harder to raise capital going forward.”
The shift out of tech stocks is proving to be a boon for defensive sectors, with utilities and healthcare shares gaining in the US. The S&P 500 Consumer Staples Index jumped 3.1% on Thursday to a record and put it on course for the best month since 1998.
The Nasdaq 100 Index is on pace for its second consecutive week of losses — the first back-to-back weekly decline since July.
The Philadelphia Semiconductor Index is set for its third straight weekly decline, the longest losing streak since November 2025.
Some investors see the declines as an opportunity to buy.
“Demand still massively exceeds supply,” Mark Matthews, the head of Asia research at Julius Baer, said on Bloomberg TV. “So when you have these big corrections like the one we saw over the last few days, particularly overnight, in semiconductor stocks, I think it is a good opportunity to buy them.”
Meanwhile, spreads on dollar bonds of higher-rated Asian companies widened to their highest since last July, moving in tandem with credit markets more broadly as the rout in AI stocks and rising geopolitical tensions drove investors toward safer assets.
In other corners of the market, gold dipped to about $4,010 an ounce, while silver lost 1.5%.
In Japan, government bond yields fell across the curve on Friday. The nation’s benchmark 10-year yield fell as much as 11 basis points to 2.76%, while the 20-year yield fell six basis points.
Treasuries surged across the curve Thursday as the deepening rout in AI-related shares, turmoil in French markets and renewed Middle East tensions fueled haven buying. The rally pushed the 10-year yield below 5% for the first time in a month, with buying in Treasury futures accelerating as traders unwound bearish positions.
Concerns about the sustainability of AI investment and its eventual payoff have knocked technology shares from recent highs and are beginning to weigh on the broader economic outlook. Traders also pared expectations for another Fed interest-rate increase this year.
“Normally, I would expect things to settle down once we get through next week’s earnings,” said Hitoshi Asaoka, a chief strategist at Asset Management One. “But this time we also have the US midterm elections coming afterward, so I think it could take longer for the market to stabilize. I also think we’re seeing risk reduction ahead of that event.”
Corporate Highlights:
South Korean chipmaker SK Hynix Inc. scrapped an initial public offering for its US subsidiary Solidigm after facing shareholder opposition. SpaceX aims to secure a minimum of 80,000 cell sites across the US, and it’s in talks with at least one major cellular infrastructure company to reach that goal, according to people familiar with the matter. Moderna Inc. and Merck & Co. fell after data on the companies’ widely anticipated personalized melanoma vaccine disappointed Wall Street. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 1:14 p.m. Tokyo time Japan’s Topix fell 1.3% Australia’s S&P/ASX 200 fell 0.1% Hong Kong’s Hang Seng rose 0.6% The Shanghai Composite fell 1.2% Euro Stoxx 50 futures were little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1213 The Japanese yen fell 0.1% to 156.93 per dollar The offshore yuan was little changed at 6.6730 per dollar The Australian dollar fell 0.1% to $0.7012 Cryptocurrencies
Bitcoin rose 0.6% to $81,639.63 Ether rose 1% to $2,403.33 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.96% Japan’s 10-year yield declined 10 basis points to 2.765% Australia’s 10-year yield declined nine basis points to 5.16% Commodities
West Texas Intermediate crude rose 0.5% to $100 a barrel Spot gold fell 0.4% to $4,010.14 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Momoka Yokoyama, Abhishek Vishnoi and Aya Wagatsuma.
©2026 Bloomberg L.P.
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