Asian stocks retreat as technology worries spill over from Wall Street
Asian equity markets opened lower on Thursday as investors pulled back from technology stocks, extending a global risk-off move triggered by sharp losses on Wall Street. Shares in Japan and Australia declined in early trade, while equity futures for Hong Kong also pointed to weakness, reflecting cautious sentiment across the region.
The decline followed a steep selloff in US technology stocks overnight, where the tech-heavy Nasdaq 100 fell nearly two percent. Nvidia Corp dropped close to four percent to its lowest level since September, reinforcing concerns that the artificial intelligence-led rally may be losing momentum. The broader S&P 500 slipped more than one percent, breaking below its 50-day moving average and touching levels last seen three weeks ago.
Market participants say the retreat from risk assets highlights growing unease over elevated valuations in global technology stocks, particularly those at the forefront of the AI spending cycle.
US tech rout deepens doubts over AI-led valuations
The heavy selling in technology shares underscored a shift in investor sentiment toward companies that have driven much of this year’s global equity gains. Mega-cap tech stocks, once seen as safe growth havens, are now facing scrutiny over whether earnings growth can justify aggressive capital expenditure and premium valuations.
“AI remains the market’s defining investment theme, but signs of fatigue are emerging,” said Jack Ablin of Cresset Capital Management. “Sector valuations are elevated, infrastructure spending is unprecedented, and enthusiasm mirrors past speculative cycles.”
Concerns around the rising costs of data centre expansion and long-term returns on AI investments have added to the pressure. Reports around financing plans linked to large-scale infrastructure projects, including those involving major US technology firms, have further unsettled investors.
Also Read : Nifty And Sensex Expected To Start Flat Following Wall Street Tech Stock Weakness
Risk-off mood boosts bonds and precious metals
As equities weakened, demand rose for traditional safe-haven assets. Shorter-maturity US Treasuries saw increased buying after comments from a Federal Reserve official supported the case for interest rate cuts. Two- and five-year bonds benefited the most, while longer-dated Treasuries moved in the opposite direction, pushing the benchmark 10-year yield slightly higher to around 4.15 percent.
In commodities, precious metals surged as investors sought protection from market volatility. Gold advanced strongly, while silver posted one of its best single-day gains of the year, hitting a fresh high. Analysts say the rally reflects both safe-haven demand and positioning ahead of potentially volatile year-end trading.
Oil prices also rebounded from recent lows, supported by escalating geopolitical tensions involving Russia and Venezuela. Traders noted that thinner holiday liquidity could amplify price swings across asset classes in the coming sessions.
Bitcoin and risk assets mirror cautious sentiment
Cryptocurrencies were not immune to the broader pullback in risk appetite. Bitcoin declined more than two percent on Wednesday, before recovering some ground in early Thursday trade. Analysts say digital assets continue to trade in line with global risk sentiment, with rallies attracting selling pressure amid uncertainty over monetary policy and equity markets.
“Confidence across speculative assets is fragile right now,” said a digital markets strategist. “Bitcoin’s inability to sustain rebounds shows investors are still in capital-preservation mode.”
US equity futures edged marginally higher after Micron Technology, the largest US memory chipmaker, issued an upbeat forecast late Wednesday. However, traders cautioned that isolated earnings optimism may not be enough to reverse the broader trend unless sentiment stabilises in the technology sector.
Asian macro signals add to mixed regional outlook
In currency markets, the Japanese yen strengthened slightly as investors positioned for a potential interest rate hike by the Bank of Japan. The central bank is widely expected to raise rates to their highest level in three decades, a move that could have implications for regional capital flows and carry trades.
Elsewhere, New Zealand’s economy showed signs of recovery, rebounding more strongly than economists had forecast in the third quarter. Falling interest rates helped drive output after a contraction in the previous quarter, offering some relief to policymakers.
In China, concerns resurfaced around the property sector after China Vanke Co, once the country’s largest homebuilder, edged closer to what could become one of the biggest debt restructurings in the nation’s history. The development added to lingering worries about financial stability and growth momentum in the world’s second-largest economy.
Markets brace for key US inflation data and year-end volatility
Looking ahead, global markets are bracing for fresh cues from US inflation data due later on Thursday. Traders remain cautious, noting that the consumer price index may be less reliable than usual due to recent government-shutdown disruptions.
As the year draws to a close, strategists say a clearer pattern has emerged: technology stocks may no longer be able to single-handedly support the broader market.
“The mega-cap tech names that powered this bull run are starting to lose their grip,” said Fawad Razaqzada of Forex.com. “Confidence in the sector is being challenged, particularly over whether stretched valuations and heavy spending on artificial intelligence can still be justified.”
With thin liquidity and heightened uncertainty, investors are preparing for choppier trading conditions through the holiday season, as shifts in sentiment continue to ripple across equities, bonds, commodities and currencies.
