Chip Stocks Sell Off, Government Bonds Edge Higher: Markets Wrap

(Bloomberg) — A global selloff in semiconductor stocks deepened as investors retreated from one of the year’s hottest trades amid elevated bond yields and geopolitical uncertainty. Treasuries gained modestly following recent losses.

Shares of Samsung Electronics Co. and SK Hynix Inc. slumped more than 7% in Seoul. That’s after losses in US chipmakers sent the Philadelphia Semiconductor Index down 5% on Tuesday, marking its worst session since late July. A gauge of the sector’s stocks in Asia was down 3.5%.

MSCI Inc.’s broader benchmark for Asia Pacific equities slid 2.2%. South Korea’s Kospi Index led declines in the region, plunging about 5.6%, as concern over rising borrowing costs for hyperscalers weighed on sentiment. Equity-index futures indicated losses would spread to Europe and US benchmarks.

Higher oil prices also weighed on the mood. Brent climbed for a fourth day, trading above $91.60 a barrel after gaining 4.5% over the previous three sessions, with no sign of progress toward resolving the US-Iran war.

Elsewhere, Treasuries nudged higher after 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 yield on 10-year Treasuries declined by two basis points to 4.69%. Japanese 20-year government bond yields also fell.

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

While the long-term AI growth story is still intact, “higher rates and geopolitical risk are making investors less willing to pay a premium for that growth,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global.

In other corners of the market, the Canadian dollar strengthened after the Trump administration agreed to delay 50% tariffs on billions of dollars of Canadian products for three days following high-stakes negotiations in Washington.

Gold hovered around $4,335 an ounce after its biggest drop in almost a month, as the bond selloff and deadlock over the Strait of Hormuz clouded the outlook for the precious metal.

The US 30-year yield fell one basis point to 5.27%, after climbing to 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.

Meanwhile, Alphabet Inc. was poised to pay just under 7% to borrow longer-dated funds in its debut Australian dollar bond deal, in potentially its highest-ever coupon.

Attention later Wednesday will be on the minutes from the Federal Reserve’s latest meeting, which may offer clues on policymakers’ thinking at a time when Chairman Kevin Warsh has scaled back communications.

In geopolitical news, 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.

“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.”

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 AI firm prepares for a highly anticipated initial public offering. 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. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.2% as of 6:50 a.m. London time Nasdaq 100 futures fell 0.4% The MSCI Asia Pacific Index fell 2.2% The MSCI Emerging Markets Index fell 1.7% S&P 500 futures fell 0.2% Japan’s Topix fell 3.2% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng was little changed The Shanghai Composite fell 2.2% Euro Stoxx 50 futures fell 0.2% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1588 The Japanese yen rose 0.2% to 159.25 per dollar The offshore yuan was little changed at 6.7419 per dollar The British pound was little changed at $1.3544 Cryptocurrencies

Bitcoin fell 0.5% to $64,256.81 Ether was little changed at $1,910.15 Bonds

The yield on 10-year Treasuries declined two basis points to 4.69% Japan’s 10-year yield declined five basis points to 2.885% Australia’s 10-year yield declined four basis points to 5.05% Commodities

Spot gold was little changed West Texas Intermediate crude rose 0.8% to $85.58 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Youkyung Lee, Momoka Yokoyama and Winnie Hsu.

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