Asian shares slipped on Friday after Wall Street’s tech sector took a hard fall overnight. The Nasdaq dropped more than 2% as worries grew about how much money the artificial intelligence boom actually needs.
The more dramatic move came in bonds. US Treasuries posted their biggest single-day rally in more than three years, as investors traded growth stories for the comfort of government debt.
From AI enthusiasm to AI anxiety
The trigger was Meta Platforms. The company reported its first cash outflow in more than a decade, and its shares fell about 8%.
Money moved quickly toward safety. Sovereign bonds and safe-haven currencies drew heavy demand as traders reduced risk.
Bonds rally, rate hike bets fade
The 10-year US Treasury yield fell 19 basis points to approximately 4.96%. A basis point is one-hundredth of a percentage point, so this was a big daily move for the world’s benchmark bond.
Traders cut their expectations for further tightening from the Federal Reserve. They removed almost a full quarter-point rate hike from pricing for next year.
A December rate rise is also no longer fully priced. The implied probability of a hike at that meeting dropped to 85%.
Asia feels the chill
Regional stock indexes followed Wall Street lower, though the declines were mixed. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%.
Japan’s Nikkei dropped 1.3%. South Korea’s KOSPI fell 1.7%, with semiconductor stocks such as SK Hynix under pressure.
The KOSPI is on track for a 4.3% weekly decline.
Oil complicates the picture
While tech slid, oil climbed. Prices reached a five-month high, with Brent crude trading between $110 and $113 per barrel on supply concerns in the Middle East.
That creates an awkward mix for central bankers. Weaker tech and falling yields point to softer growth. Expensive oil points to sticky inflation.
What this means for markets
The bond market’s reaction may be the most telling signal. A rally of this size in Treasuries reflects real worry about growth, not just a routine rebalance.
The risks also cut the other way. Elevated oil prices and Middle East supply tensions could revive inflation fears and push yields back up, which would undercut the bond rally.
The broader shift is about priorities. For now, investors appear to value financial stability over growth potential. Upcoming earnings from major tech firms could either ease the funding concerns or deepen them.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.