Stocks Drop With Tech in Focus, Treasuries Rise: Markets Wrap

(Bloomberg) — Stocks fell at the start of a pivotal week for markets, with the artificial intelligence trade under pressure ahead of key tech earnings and the Federal Reserve’s annual gathering. Treasuries rose as oil fell.

MSCI’s Asia Pacific equities gauge almost 1%, with Samsung Electronics Co. and Alibaba Group Holding Ltd. contributing most to its losses. Samsung slid 8.7% in Seoul as investors were underwhelmed by its plans to return as much as 110 trillion won ($80 billion) to shareholders. Alibaba tumbled 9.8% in Hong Kong after announcing plans to raise HK$80 billion ($10.2 billion) in a share sale.

SoftBank Group Corp. shares slipped 4.6% in Tokyo after announcing plans for a record ¥1 trillion ($6.3 billion) retail bond offering. Futures contracts indicated modest losses for European and Wall Street gauges.

Treasuries rose ahead of a fiscal consolidation plan announcement by US Treasury Secretary Scott Bessent. A decline in oil also helped bonds, with Brent falling 1.3% to about $93.15. The US 10-year yield eased two basis points to 4.71%, with yields in Australia and New Zealand also falling.

It’s a crucial week for markets, with investors looking to Fed Chair Kevin Warsh’s comments at Jackson Hole, Wyoming, for clues on the path for interest rates as elevated oil prices stoke inflation pressures and bond yields soar to multi-decade highs. Traders are also bracing for Nvidia’s earnings and guidance to gauge whether this year’s rally in AI shares has further to run.

“Markets are lacking direction to start the week, and that’s fair enough when you’ve got Nvidia on Wednesday and Warsh’s first Jackson Hole as chair on Friday,” said Josh Gilbert, an analyst at eToro. “Nobody is making big moves before the biggest company in the world reports and the new Fed chair tells us whether he’s more worried about inflation or the bond market.”

Nvidia, which reports Wednesday, was also in the news after notifying customers about price hikes.

The developments add to already brewing concerns over the sustainability of the AI spending boom, with soaring hardware costs threatening returns just as companies commit ever-larger sums to the technology.

Investors are “just not necessarily focusing on the building of AI, but also what companies will be able to be very disciplined in terms of having that monetization roadmap and having that return on investment,” said Beth Wong, Asian equities senior investment specialist at HSBC Asset Management.

What Bloomberg Strategists Say…

“As investors again lean into dollar debasement trades, global equities look set to rally into a catalyst-packed week featuring Nvidia earnings, US core PCE, and the Jackson Hole symposium.”

— David Savage, MLive. For full analysis, click here.

In other corners of the market, the Canadian dollar weakened following the collapse of trade talks with the US late Friday that saw Washington place a 50% duty on about $20 billion of Canadian goods. Prime Minister Mark Carney said Canada will apply counter-tariffs on $20 billion of US products on Sept. 8. in response.

Gold extended its gains from last week, trading around $4,640 an ounce. The commodity is close to a three-month high after the US Treasury’s intervention in the bond market revived concerns about a weaker dollar and pushed investors toward alternatives.

Attention is also on Bessent Monday and his economic isolation plans for Iran.

“At dawn begins an economic D-Day — the single greatest financial offensive ever marshalled against an adversary,” Bessent wrote in a Financial Times article.

Traders are also watching Bessent’s fiscal consolidation plans after last week’s announcement of increased buybacks of long-term bonds whipsawed the Treasury market.

The extra compensation investors demand to hold long-dated government bonds is likely to remain elevated barring an unexpected economic downturn, presenting opportunities to buy at higher yields, according to Pacific Investment Management Co.

“We continue to view bonds as attractive and would look to add if yields continue to rise, given the opportunity higher yields present for income, carry, and rolling down a steeper yield curve,” Marc Seidner, chief investment officer of non-traditional strategies, and Pramol Dhawan, head of emerging markets portfolio management, wrote in a report.

Corporate News:

Shell’s US chemicals assets have drawn interest from potential bidders including ExxonMobil, LyondellBasell, Apollo and Kuwait Petroleum Corporation’s chemicals arm, the Financial Times reported, citing unidentified people familiar with the matter. Nvidia is discussing investing in Perplexity in an equity round valuing the AI startup at more than $30 billion, The Information reported, citing unidentified people familiar with the talks. Shein Global Holdings Ltd. is seeking to raise as much as HK$13.9 billion ($1.8 billion) in its Hong Kong initial public offering. Separately, US authorities are conducting a national security review of Shein Global Holdings Ltd.’s purchase of American clothing retailer Everlane after Shein sought approval for the deal, people familiar with the matter said. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 1:59 p.m. Tokyo time Japan’s Topix rose 0.2% Australia’s S&P/ASX 200 rose 0.5% Hong Kong’s Hang Seng fell 2.1% The Shanghai Composite fell 0.7% Euro Stoxx 50 futures fell 0.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1682 The Japanese yen was little changed at 158.86 per dollar The offshore yuan was little changed at 6.7234 per dollar Cryptocurrencies

Bitcoin fell 0.6% to $76,899.57 Ether fell 0.5% to $2,438.56 Bonds

The yield on 10-year Treasuries declined two basis points to 4.71% Japan’s 10-year yield was unchanged at 2.875% Australia’s 10-year yield declined four basis points to 5.02% Commodities

West Texas Intermediate crude fell 1.7% to $85.60 a barrel Spot gold rose 0.8% to $4,637.65 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Joanne Wong and Ruth Carson.

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