Stocks Extend Losses, Bonds Rally on Haven Demand: Markets Wrap
(Bloomberg) — Global stocks extended losses after suffering their steepest drop in nearly a month on concerns over elevated valuations. Bonds advanced and investors sought the safety of haven currencies such as the yen.
US equity-index futures slipped, signaling further losses for the S&P 500 and Nasdaq 100 indexes after the gauges pulled back with tech shares hit the hardest. Sentiment was shaky early in the Asian session after Super Micro Computer Inc. shares slumped in late trading and Advanced Micro Devices Inc. failed to impress investors with its revenue forecast.
Asian shares fell 1.3% with South Korea’s Kospi — a poster child for the artificial intelligence boom and one of this year’s top-performing markets — and Japan’s Nikkei dropping about 3%. Both indexes were off the session’s lows. Contracts indicated European stocks were also set for a weaker open.
As investors sought safety, Treasuries edged up, with the yield on the 10-year falling two basis points to 4.07%. Gold rebounded after the biggest drop in more than a week. The yen strengthened to 153.47 against the dollar.
“A pullback was overdue after strong and steady gains in tech,” said Charu Chanana, the chief investment strategist at Saxo Markets in Singapore. “A firmer dollar, weaker crypto markets, and valuation concerns in US Big Tech have all combined to pressure risk sentiment.”
The pause in the global stock rally came after the booming outlook for AI and hopes the Federal Reserve will keep cutting rates sent the US stock benchmark up by almost 40% from its lows in April. But those gains have been confined to fewer shares as sentiment and technical indicators showed signs of overheating, leading Wall Street chiefs to note the possibility of a retreat as a healthy development.
Warnings about frothy stock valuations are easy to find after a record-breaking rally pushed prices to levels typically associated with exuberance. Optimism had turned intense in recent months, with many traders focused on chasing gains rather than questioning lofty prices.
Yet those solid gains, combined with the recent narrowness of the advance, spurred vulnerability worries.
Selling pressure trimmed roughly $500 billion in combined market capitalization from the Philadelphia Semiconductor Index on Tuesday and a Bloomberg gauge tracking Asia chip stocks on Wednesday.
“There are concerns about AI and valuation, but I don’t think we’re at the late stage of the AI bubble, there’s still room to go, so there’ll be some bottom fishers,” said Xin-Yao Ng, a fund manager at Aberdeen Investments.
What Bloomberg strategists say…
While European stocks may come under pressure from the global risk-averse mood, their relative cheapness means that any selloff will be milder than what we saw on Wall Street on Tuesday.
— Ven Ram, MLIV strategist. For full analysis, click here.
Some investors also said that sentiment improved during the Asian day after the Chinese government’s announcement to continue to suspend its 24% tariffs on some US goods from Nov. 10 for a year while keeping 10% tariffs.
Technology stocks led the losses in Asia with Disco Corp. shares slumping about 9% and Samsung Electronics Co. 3.8%. South Korea briefly halted sell orders for program trading after Kospi 200 futures dropped more than 5%, triggering a so-called sidecar for the first time since April.
Elsewhere, the Australian dollar surged to a 12-year high against the kiwi early Wednesday after a jump in New Zealand’s jobless rate.
In commodities, crude oil benchmark Brent pared a drop to trade near $64 a barrel, while copper and iron ore were flat after erasing earlier losses.
“It’s a sea of red across broad markets, and one that offers a gloomy and damp portrayal of risk,” Chris Weston, head of research at Pepperstone Group, wrote in a note to clients.
Meanwhile, the US government has reached a major milestone of dysfunction as Congress has allowed a federal shutdown to drag into its 36th day — the longest in history — amid a stalemate over health-care and spending priorities.
Corporate News:
Advanced Micro Devices Inc., the main contender to Nvidia Corp. in the artificial intelligence chip market, failed to impress investors with its revenue forecast after an eye-popping rally sent expectations soaring. Super Micro Computer Inc. shares tumbled in late trading after the server maker missed reduced estimates for first-quarter sales and profit and gave a disappointing earnings forecast for the current period. Apple Inc. is preparing to enter the low-cost laptop market for the first time, developing a budget Mac aimed at luring away customers from Chromebooks and entry-level Windows PCs. Nintendo Co.’s stock rose by its most in six months after the company raised its Switch 2 outlook, a strong signal of confidence in the marquee console’s momentum ahead of the critical holiday season. Toyota Motor Corp. raised its annual profit guidance after Japan’s trade deal with President Donald Trump avoided a worst-case-scenario for tariffs on cars and auto parts. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 2:57 p.m. Tokyo time Japan’s Topix fell 1.6% Hong Kong’s Hang Seng fell 0.3% The Shanghai Composite rose 0.3% Euro Stoxx 50 futures fell 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1491 The Japanese yen rose 0.1% to 153.49 per dollar The offshore yuan was little changed at 7.1319 per dollar Cryptocurrencies
Bitcoin rose 1.5% to $101,778.7 Ether rose 3.6% to $3,328.11 Bonds
The yield on 10-year Treasuries declined two basis points to 4.07% Japan’s 10-year yield declined one basis point to 1.665% Australia’s 10-year yield declined four basis points to 4.31% Commodities
West Texas Intermediate crude rose 0.1% to $60.64 a barrel Spot gold rose 0.8% to $3,962.70 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jake Lloyd-Smith.
©2025 Bloomberg L.P.
