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 dropped 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 9.6% in Hong Kong after announcing plans to raise HK$80 billion ($10.2 billion) in a share sale.

SoftBank Group Corp. shares slipped 4.9% in Tokyo after announcing plans for a record ¥1 trillion ($6.3 billion) retail bond offering.

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 $93.20. 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.

“What we have seen since July is that change in market narrative,” said Beth Wong, Asian equities senior investment specialist at HSBC Asset Management.

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,” she said.

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.

A Bloomberg gauge of the dollar was little changed after posting its third weekly decline in four weeks. Bitcoin edged lower to about $77,100.

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.

While Bessent has attempted to ease concerns over US fiscal policy, the Congressional Budget Office offers little evidence of fiscal consolidation, projecting large budget deficits and debt rising to a record 120% of GDP in 10 years, Elias Haddad, global head of markets strategy at Brown Brothers Harriman, wrote in a note to clients.

“Without credible spending cuts or revenue increases, the White House plan risks being little more than putting lipstick on a pig,” Haddad wrote.

Corporate News:

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. Australian fuel retailer Ampol Ltd. returned to a profit in the first half, with earnings more than tripling as the conflict in the Middle East upended global markets. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 12:51 p.m. Tokyo time Nikkei 225 futures (OSE) fell 0.7% Japan’s Topix rose 0.2% Australia’s S&P/ASX 200 rose 0.6% 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 $1.1678 The Japanese yen was little changed at 158.97 per dollar The offshore yuan was little changed at 6.7238 per dollar Cryptocurrencies

Bitcoin fell 0.4% to $77,122.88 Ether fell 0.4% to $2,440.01 Bonds

The yield on 10-year Treasuries declined two basis points to 4.71% Japan’s 10-year yield advanced two basis points to 2.890% Australia’s 10-year yield declined three basis points to 5.03% Commodities

West Texas Intermediate crude fell 1.6% to $85.67 a barrel Spot gold rose 0.9% to $4,644.82 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Yihui Xie, Momoka Yokoyama, Winnie Hsu and Joanne Wong.

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