By Tom Westbrook
SINGAPORE (Reuters) -Tech-heavy stock markets were bracing for their heaviest weekly falls in seven months on Friday as investors have turned uneasy about how far the rally in artificial intelligence stocks has run, while safer assets such as bonds and the yen went higher.
S&P 500 futures and Nasdaq 100 futures were a touch firmer in the Asia morning, but overnight the Nasdaq dropped 1.9%. [.N]
For the week so far the world’s biggest tech index is down 2.8%, which if sustained would mark its largest one-week drop since March and a jolt for a juggernaut that has gained more than 50% from lows touched when tariffs were announced in April.
Japan’s Nikkei fell 1.8% in morning trade to head for a weekly loss of 4.7%, the largest since late March, while in Seoul the Kospi fell 1.4% for a 3.3% weekly fall, its worst since late March. [.T][.KS]
Chip and cable makers were among the biggest losers, with tech investor Softbank Group Corp down more than 20% this week. Bitcoin, sometimes a bellwether for tech sentiment, is down 8% on the week to $101,092.
MOOD SHIFT
There has been no obvious trigger for the pullback in AI-related share prices but the market reaction to recent results shows how some of the fears about a bubble in the sector and questions about profitability are starting to surface.
Late last month Meta stock dived after the company outlined big capital expenses as it builds data centres in an AI push. Shares in data and AI firm Palantir Technologies have also tumbled in spite of beating earnings forecasts.
“Sometimes it’s a gradual shift in markets whereby an increasing number of people say: ‘Well, I’m well positioned … maybe I’ll take some money off the table,'” said Herald van der Linde, head of equity strategy for Asia Pacific at HSBC.
“And a second one says so. And a third one. And a fourth one says, hey, these three are selling. I might maybe be selling as well, right? So it’s a shift in the market sentiment that has its own sort of dynamic. That might well be unfolding a little bit now.”
The S&P 500 closed 1.1% lower overnight and the Philadelphia SE Semiconductor index dropped 2.4%.
BONDS, YEN HIGHER
Bond markets rallied on a clamour for safety and also as some second-tier U.S. employment data pointed to a wave of layoffs that could support further U.S. rate cuts. [US/]
Benchmark 10-year U.S. Treasury yields fell 6.4 basis points overnight to 4.09% after outplacement firm Challenger, Gray & Christmas said there had been a surge in announced job cuts in October.
Such private surveys have gained attention in the market while a prolonged U.S. government shutdown has halted official U.S. data publication.
The move lower in yields pulled down the dollar, which slipped nearly 0.5% overnight to $1.1546 per euro.
Losses were a little bit larger on safe-haven currencies such as the yen and Swiss franc, with the dollar last at 153.17 yen and 0.8069 francs. [FRX/]
Sterling jumped after the Bank of England left interest rates on hold, though the likelihood of a cut in December capped gains and it traded a fraction lower at $1.3128 in Asia.
Gold was firm just below $4,000 an ounce. Brent crude held at $63.64 a barrel.
(Editing by Shri Navaratnam)
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