Asian Markets Retreat as AI Tech Sell-Off Triggers Bond Rally
Asian stocks decline as AI funding concerns spark a major Treasury rally and dampen expectations for further Federal Reserve interest rate hikes.
POLICY WIRE — Sydney, Australia — Asian equity markets faced a downturn on Friday as mounting anxiety regarding the massive capital requirements for artificial intelligence projects triggered a sharp sell-off in the technology sector.
The market volatility fueled the most significant daily rally for U.S. Treasuries in over three years, as investors pivoted toward sovereign bonds and safe-haven currencies. This shift in sentiment led markets to aggressively scale back projections for additional monetary tightening by the Federal Reserve, effectively removing nearly a full rate hike from expectations.
The MSCI broadest index of Asia-Pacific shares, excluding Japan, retreated 0.3% on Friday. This decline extended the index’s weekly losses to 2.7%, marking its fourth consecutive week of negative performance.
In Japan, the Nikkei 225 index dropped 1% amid concerns over inflated valuations in the AI sector and shifting interest rate outlooks. Meanwhile, fresh data indicated that Japanese manufacturing growth slowed to a seven-month low in October, while rising wholesale prices fueled speculation regarding a potential rate hike by the Bank of Japan later this month.
Reporting by Policy-Wire (PW)
