(June 23): Asian stocks slumped on Tuesday as investors rotated out of some of this year’s best-performing technology shares while awaiting further developments in US-Iran peace talks.
MSCI Inc’s gauge of regional equities declined more than 2% after closing at a record high, and South Korea’s Kospi plunged over 6% on renewed concern that a rally in heavyweight chip stocks has become overstretched. A subgauge of Asian tech names snapped an eight-day winning run. S&P 500 futures retreated 0.6% while Nasdaq 100 contracts slid 1.1%. Oil prices edged lower.
The moves in Asia came after a slide in megacap tech stocks and rising bond yields dragged the S&P 500 down 0.4% on Monday. SpaceX shares tumbled 16% in a third straight day of losses, shedding hundreds of billions of dollars in value, after the company said it is selling investment-grade bonds in what's expected to be a massive borrowing spree.
“The weakness in mega tech overnight is putting pressure on market sentiment,” said Fabien Yip, a market analyst at online brokerage IG International. “While the US-Iran peace deal continues to make progress, there are still fundamental differences on how both countries interpret the terms.”
Attention is shifting to memory chipmaker Micron Technology Inc’s quarterly results on Wednesday, which will be a critical test of whether artificial intelligence (AI) spending can sustain its own rally — the shares are up more than 300% this year — as well as the run-up across tech.
See also: US futures slip, oil climbs on renewed Iran threat
The AI trade has been a key pillar for global equity markets this year, helping a gauge of world stocks overcome challenges posed by the Middle East conflict to notch successive record highs, most recently on June 2.
Expectations that a peace deal will be reached, as well as solid corporate earnings, have fuelled a 14% advance in the S&P 500 Index this quarter through Monday. However, that trails a 26% surge in the MSCI Asia-Pacific Index. Benchmarks in Taiwan, South Korea and Japan’s Nikkei 225 have each soared at least 40%.
“Asian markets are tracking a rotation already underway in the US rather than a fresh risk-off move,” said Billy Leung, an investment strategist at Global X Management in Sydney. “Hyperscalers have been leading the pullback on AI capex concerns and negative cash flow concerns.”
See also: A stock trader’s guide to navigating a rare ‘Super El Niño’
Brent crude edged lower to trade below US$78 ($101) a barrel after falling more than 3% on Monday, when both Washington and Tehran cited progress in the first round of discussions towards a lasting peace agreement.
The US issued a 60-day licence allowing Iran to sell oil on the international market, giving it an economic lifeline, but some discrepancies have emerged — US Vice President JD Vance said Iran agreed to allow nuclear inspectors into the country, a claim disputed by Tehran.
In currencies, the Japanese yen lingered near its lowest level since 1986. Currency traders remained on high alert for intervention after a call between Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent. The Bloomberg Dollar Spot Index was little changed after rising 0.2% on Monday.
Treasuries were steady after falling on Monday even as oil prices turned lower. Strategists cited Federal Reserve chairman Kevin Warsh’s hawkish messaging last week as one of the reasons for the selling pressure. Bond traders are now looking to this week’s personal spending data in the US for an early read on whether the market’s newly hawkish stance is warranted.
Elsewhere in markets, gold declined more than 1% as inflationary concerns overshadowed early optimism around negotiations to resolve the Iran war. Silver lost more than 2%. Bitcoin edged lower.
“Iran talks shifting to lower-level technical discussions is keeping some uncertainty alive, but the real swing factor this week remains core personal consumption expenditures on Thursday,” said Leung of Global X.
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Some of the main moves in markets:
Stocks
- S&P 500 futures were down 0.6% as of 12.48pm Tokyo time on Tuesday
- Japan’s Topix fell 1.3%
- Australia’s S&P/ASX 200 fell 0.1%
- Hong Kong’s Hang Seng fell 1.3%
- The Shanghai Composite fell 0.4%
- Euro Stoxx 50 futures fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1426
- The Japanese yen was little changed at 161.56 per dollar
- The offshore yuan was little changed at 6.7812 per dollar
Cryptocurrencies
- Bitcoin fell 0.7% to US$63,930.91
- Ether fell 0.4% to US$1,726.68
Bonds
- The yield on 10-year Treasuries declined one basis point to 4.49%
- Japan’s 10-year yield was little changed at 2.665%
- Australia’s 10-year yield declined three basis points to 4.78%
Commodities
- West Texas Intermediate crude fell 0.3% to US$73.65 a barrel
- Spot gold fell 1.2% to US$4,138.82 an ounce
Uploaded by Tham Yek Lee
