Asian stocks fell on Oct. 9 as investors weighed the huge sums companies plan to raise for artificial intelligence investment, alongside rising energy prices and turmoil in bond markets. The spending push runs through corporate balance sheets and global markets. Higher borrowing costs make the bill harder to carry.
Technology shares led Wall Street’s main indexes lower overnight after a report said OpenAI’s annualised revenue was US$20 billion (S$25.6 billion) below what the company had previously signalled. SpaceX, Broadcom and Oracle each expected to raise billions to buy high-end AI chips. Australia’s Firmus, a data-centre operator backed by Nvidia, shelved its US$5 billion initial public offering, citing market volatility and conditions. It said it would pursue a private fundraising round instead.
Chris Weston, head of research at Pepperstone, wrote: “It has been a sea of red across technology, AI infrastructure and semiconductors, with the OpenAI headlines seemingly providing the catalyst for investors to take some exposure off the table. ‘For now, though, the price action suggests investors are becoming more selective about where they want exposure and, importantly, what price they are prepared to pay for future growth.’”
Who Pays for the Funding Push
The corporate race for AI infrastructure is colliding with higher yields and concerns about rising government debt. Higher energy costs, expectations of central-bank rate hikes and debt concerns had fuelled a months-long global bond sell-off, pushing borrowing costs to multi-decade highs. When financing gets more expensive, companies seeking billions to fund expansion face a more demanding market for capital.
Charu Chanana, chief investment strategist at Saxo, said: “With long-term yields back around multi-decade highs, investors no longer have the luxury of valuing AI growth in a low-cost-of-capital world.” Chanana said higher sovereign yields and increased corporate issuance to fund AI infrastructure meant capital was becoming “both more expensive and more selective, which puts balance sheets and the quality of future earnings firmly in focus”.
The market falls reached beyond technology. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.16%, putting it on course for a weekly decline of more than 1%. Japan’s Nikkei fell more than 1%. Markets in South Korea and Taiwan were closed for a holiday.
War, Debt and Election Calendars
Brent crude futures traded at US$103.70 a barrel during Asian hours, after rising more than 4% in the previous session. Concerns about the war in the Middle East had fuelled inflation worries and higher interest rates around the world. President Donald Trump said on Oct. 8 that the United States wouldn’t launch an attack on Iran before the November U.S. midterm elections. Traders remained sceptical that the war was nearing an end.
Nick Twidale, chief market strategist at ATFX Global, said: “The big question for markets is whether Trump sticks to his word if Iranian attacks intensify. ‘Any indication that the White House is reconsidering military action could see oil prices spike sharply higher, particularly with tanker traffic through the Strait of Hormuz already under significant pressure.’”
Investors were also watching France’s debt load, budget deficit and political outlook ahead of the 2027 presidential election. ING analysts said French bond spreads faced “more than half a year of higher volatility and continued spread elevation” before the two rounds of the election in April and May next year.
The U.S. benchmark 10-year yield held steady at 5.226%, near the 24-year high it reached on Oct. 7, after solid Treasury auctions that week. ING analysts said the pause “does not mean the bond market sell-off is over”. The dollar remained strong as the euro headed for a fifth straight week of losses, last trading at US$1.122, around the 17-month low it touched earlier in the week amid concerns about French debt. There’s no account in the report of a grassroots response to these pressures. Its focus stayed with markets, governments and companies seeking capital.