Chip Selloff Extends to Asia, Treasuries Stabilize: Markets Wrap

(Bloomberg) — Asian stocks dropped as a semiconductor selloff deepened, with investors retreating from one of the year’s hottest trades amid elevated bond yields and geopolitical uncertainty. Treasuries stabilized following recent losses.

MSCI’s Asia Pacific equities benchmark slid 2%, with South Korean shares dropping 4.8%. Chip bellwethers Samsung Electronics Co. and SK Hynix Inc. both declined over 6%, tracking a semiconductor selloff on Wall Street. Kioxia Holdings Corp. plunged about 9% in Tokyo.

Treasuries steadied following a global bond selloff that had pushed 10-year US yields close to their highest levels since early 2025 and 30-year yields to levels last seen in 2007. The benchmark 10-year yield was little changed at 4.71%, while bonds rose in Australia and New Zealand.

Elsewhere, oil climbed for a fourth day, with no sign of progress toward resolving the US-Iran war after almost six months of conflict. Brent traded above $91 a barrel after gaining 4.5% over the previous three sessions.

“With the outlook for the Middle East remaining uncertain and yields staying elevated, markets are likely to remain in risk-off mode today,” said Kazunori Tatebe, chief strategist at Daiwa Asset Management. “Higher yields will increase borrowing costs for hyperscalers, raising questions about the outlook for capital spending and the potential impact on AI infrastructure companies.”

Technology stocks, seen as a long-term growth bet, came under pressure as bond yields hovered near multi-decade highs amid persistent inflation, heavy government spending and a flood of debt issuance. Geopolitical turmoil added to the strain by raising the risk of energy-driven supply shocks that could keep inflation and borrowing costs elevated for longer.

The chip sector remained in focus after the Philadelphia Semiconductor Index slid 5% on Tuesday, its biggest drop since late July. An Asian gauge of chip-related stocks retreated 2.4%, with Taiwan Semiconductor Manufacturing Co. and Renesas Electronics Corp. among the decliners.

In other corners of the market, Unitree Robotics shares rose 629% in its Shanghai trading debut after raising 6.1 billion yuan ($904 million) in an initial public offering that will make it the first publicly traded humanoid robot maker in mainland China.

Gold steadied around $4,340 an ounce after its biggest drop in almost a month, as a bond selloff and deadlock over the Strait of Hormuz clouded the outlook for the precious metal.

The US 30-year yield was little changed at 5.29%, after climbing as high as 5.34% in the prior session.

What Bloomberg Strategists Say…

“There is a mini wave of bond futures buying across JGBs, Treasuries and in Australia, which looks like a knee-jerk haven bid as stocks slide in South Korea and Japan. The shift is being helped by positioning, which became heavily stretched to bond shorts recently.”

— Mark Cranfield, MLive Asia. For full analysis, click here.

Widening credit spreads, rising interest rates and a surge in supply all contributed to a softer high-grade funding backdrop Tuesday, prompting at least seven issuers to decide against announcing bond deals to the market.

“Long-duration bonds remain exposed to heavy issuance, persistent fiscal deficits, and resilient nominal growth,” wrote Thomas Poullaouec, a portfolio manager at T. Rowe Price that oversees more than $1.8 trillion in assets. “With corporate balance sheets healthy, capital markets open, and investor positioning not excessively bullish, we believe equities offer a better balance of upside participation and relative risk.”

Minutes from the Federal Reserve’s latest meeting are due Wednesday and may offer clues on policymakers’ thinking at a time when Chairman Kevin Warsh has scaled back communications.

Meanwhile, Middle East tensions intensified after the United Arab Emirates said two ballistic missiles fired from Iran toward the country fell into the sea, marking the Islamic Republic’s first known attack on the Gulf nation since May as the wider conflict dragged on.

“The surge in oil prices caused by growing uncertainty over Iran continues to dampen investor sentiment,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan. “Combined with rising inflation concerns, this has created broad headwinds for equity markets, negatively affecting a wide range of sectors and stocks.”

Corporate Highlights:

Anthropic PBC’s revolving credit facility is set to rise above its roughly $10 billion target, according to people familiar with the matter, as the artificial-intelligence firm prepares for a highly anticipated initial public offering. Baidu Inc.’s revenue fell for a fifth consecutive quarter, reflecting a weakening position in ads as well as AI development against rivals like Moonshot. Xiaomi Corp. posted its third consecutive profit decline. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 10:49 a.m. Tokyo time Japan’s Topix fell 2.6% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng fell 0.5% The Shanghai Composite fell 1.1% Euro Stoxx 50 futures fell 0.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1576 The Japanese yen was little changed at 159.47 per dollar The offshore yuan was little changed at 6.7460 per dollar Cryptocurrencies

Bitcoin fell 0.3% to $64,379.63 Ether was little changed at $1,912.87 Bonds

The yield on 10-year Treasuries was little changed at 4.71% Japan’s 10-year yield declined two basis points to 2.915% Australia’s 10-year yield declined three basis points to 5.06% Commodities

West Texas Intermediate crude rose 1.1% to $85.91 a barrel Spot gold rose 0.4% to $4,351.29 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Momoka Yokoyama, Ruth Carson and Winnie Hsu.

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