Stocks Drop on AI Slowdown Concerns, Oil Advances: Markets Wrap

(Bloomberg) — Stocks and futures retreated after major artificial intelligence companies called for a slowdown in the technology’s development, raising concerns about a sector that has powered this year’s rally. Oil rose.

MSCI’s Asia Pacific equities index dropped 0.8%, with the Kospi Index — a barometer of AI investment — falling 3.4%. Chipmakers SK Hynix Inc. and Samsung Electronics Co. lost over 4% in Seoul, while SoftBank Group Corp. slumped as much as 13% in Tokyo after OpenAI’s Chief Executive Officer Sam Altman said that the company won’t go public this year.

Futures on the tech-heavy Nasdaq 100 Index declined 1.3% and those for the S&P 500 Index fell 0.6%. European shares were also set to open lower.

Meanwhile, Brent crude rose 2.2% to $106.95 a barrel after Saudi Arabia shut a key oil pipeline following drone attacks and a planned meeting between Iran and Gulf states was postponed.

The dollar strengthened and Treasuries held losses from last week’s selloff, which pushed the benchmark 10-year yield closer to 5%. That came after hotter-than-expected US inflation strengthened the case for higher interest rates. Swap traders now see a nearly 90% chance the Federal Reserve will raise its key rate Wednesday.

Investors are re-evaluating the AI trade to gauge whether the weekend’s warnings could curb corporate spending and challenge earnings expectations across the supply chain. The shift comes at the start of a pivotal week for markets, with a Fed meeting ahead as rising oil prices fuel inflation concerns and keep borrowing costs elevated.

“Two unwelcome headwinds collide,” said Tim Waterer, chief market analyst for KCM Trade. “Warnings that AI development needs to slow down, combined with another leg higher in oil prices after the Saudi East-West pipeline closure, is a difficult mix for risk assets. The sight of the 10-year Treasury yield on the doorstep of the 5% level is another nervous sign for stocks.”

What Bloomberg’s Strategists Say…

“The Kospi’s directional correlation with US stocks has declined since Korean stocks slumped in July. But a fresh period of weakness would be tough for Nasdaq companies to ignore, especially as the AI executives calling for slower development of the technology are from the American side.”

— Mark Cranfield, Markets Live strategist. Click here for the full analysis.

Anthropic PBC Chief Executive Officer Dario Amodei said Saturday that the company would introduce additional safeguards, including independent third-party evaluations, and urged the broader industry to slow the development of its most advanced models. OpenAI’s Altman backed the proposal, while xAI’s Elon Musk said “Dario is right.”

US President Donald Trump downplayed the growing alarm over AI risks with questions arising over how committed industry leaders will be to slowing development of their most advanced — and lucrative — models amid intense competition from Chinese rivals.

The debate adds to scrutiny of the billions being poured into AI and whether earnings can justify soaring infrastructure costs. High-valuation shares remain vulnerable to signs of weaker returns or slower spending, though some investors expect any pullback to be short-lived as demand for computing infrastructure remains strong.

“Investors are cautious for now, as it remains unclear how far the slowdown in AI development could go,” said Yugo Tsuboi, chief strategist at Daiwa Securities Co. “I don’t really see investment in AI development itself declining. Rather, as the industry leaders have suggested, it’s more a matter of slowing the pace.”

In other corners of the market, gold slipped 0.5% to about $4,330 an ounce as growing bets on a Fed rate hike reduced the appeal of the non-yielding metal. A Bloomberg gauge of the dollar’s strength climbed 0.2%.

The Swedish currency was a touch weaker after the tightest election in the country’s history.

The 10-year Treasury yield held at 4.96%, with attention turning to the Fed policy decision Wednesday.

Three decisions, starting with the Fed and followed on successive days by policymakers in the UK and Japan, could reshape the global monetary policy outlook for the rest of 2026 and beyond.

With oil emphatically above $100 a barrel again and the Middle East war apparently reigniting, any hope among policymakers for a respite in global price pressures seems faint for now.

“The spike in oil prices, and especially its derivatives like diesel, is fueling inflation and growth worries,” said Frederic Neumann, chief Asia economist at HSBC. “Meanwhile, central banks are in focus this week, with the Fed and the BoJ likely tightening policy and thus delivering further headwinds for any global rally in risk assets. None of these worries are necessarily game changers, but they are significant enough for investors to take a breather.”

Corporate Highlights:

Anthropic PBC has picked Nasdaq as its listing venue ahead of a potential record-setting initial public offering, according to a person familiar with the matter. Anthropic told a small group of shareholders it will report an adjusted operating profit this quarter, the Financial Times reported. OpenAI won’t go public this year as the artificial intelligence company focuses on addressing safety-related concerns around the technology, CEO Altman told Fortune in an interview. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.6% as of 6:50 a.m. London time Nasdaq 100 futures fell 1.3% The MSCI Asia Pacific Index fell 0.8% The MSCI Emerging Markets Index fell 1.2% Japan’s Topix rose 0.5% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng rose 0.3% The Shanghai Composite fell 0.2% Euro Stoxx 50 futures fell 0.4% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1568 The Japanese yen fell 0.3% to 154.10 per dollar The offshore yuan was little changed at 6.7065 per dollar The British pound fell 0.2% to $1.3503 Cryptocurrencies

Bitcoin rose 0.2% to $77,464.48 Ether was little changed at $2,509.99 Bonds

The yield on 10-year Treasuries was little changed at 4.96% Japan’s 10-year yield was unchanged at 2.980% Australia’s 10-year yield declined three basis points to 5.34% Commodities

Spot gold fell 0.6% to $4,324.82 an ounce West Texas Intermediate crude rose 2.2% to $102.25 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Momoka Yokoyama and Aya Wagatsuma.

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