Asian share markets declined on Monday, October 19, as concerns over the funding needs of artificial intelligence (AI) companies weighed on investor sentiment. The MSCI index of Asia-Pacific shares outside Japan fell 0.3%, with Japan's Nikkei 225 dropping 2% after a 5.4% loss the previous week. South Korea's KOSPI decreased by 1.6%, following a decline of over 14% last week.
Key Details
Oil prices also fell, with Brent crude down 1.6% to $108.06 per barrel and U.S. crude futures losing 0.7% to $100.70 per barrel. This drop came after U.S. President Donald Trump indicated he would waive some sanctions on Russia, although no final decision has been made. The geopolitical tensions, including a reported incident involving a tanker hitting a mine in the Strait of Hormuz, contributed to market volatility.
In the U.S., stock futures showed some resilience, with S&P 500 futures rising 0.5% and Nasdaq futures up 0.8%. The decline in oil prices provided support for bonds, leading to a drop in the yield on the 10-year Treasury, which fell to approximately 5.06%. This marked the largest weekly decline in bond yields in over eight months.
Background
My Bui, an economist at AMP, noted, "Investors have long worried that AI revenues won’t be sufficient to recoup the massive upfront investment." He added that depreciation of AI infrastructure could lower book values significantly.
Related coverage: Asian Stocks Dip as Earnings Season Approaches, Oil Slides.
The decline in oil prices is likely to affect energy sector stocks, while rising bond yields could impact tech companies' borrowing costs. The overall sentiment in Asian markets remains cautious ahead of a busy week for corporate earnings.
Watch for upcoming earnings reports from major tech firms, which could influence market direction and investor sentiment.
Based on reporting by: fortune.com, businesstimes.com.sg