Asian stocks fell on Oct. 9 as investors weighed high energy prices, bond-market turmoil and the large sums companies expect to spend on artificial intelligence. Technology shares led the retreat after a report said OpenAI's annualised revenue was US$20 billion (S$25.6 billion) below what the company had previously signalled. The regional index looked set for a second straight weekly decline.
AI Funding Under Scrutiny
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.16%, putting it on track for a weekly decline of more than 1%. Japan's Nikkei dropped more than 1%, while markets in South Korea and Taiwan stayed closed for a holiday. Overnight, technology stocks also pulled Wall Street's main indexes lower.
Investors considered an expected large fundraising round, as SpaceX, Broadcom and Oracle each expect to raise billions to buy high-end AI chips. The OpenAI revenue report added to concerns about how much money companies are committing to AI infrastructure.
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." He added: "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."
Nvidia-backed Australian data-centre operator Firmus shelved its US$5 billion initial public offering, citing market volatility and conditions. The company said it would pursue a private fundraising round instead.
Energy and Borrowing Costs
Brent crude futures traded at US$103.70 a barrel during Asian hours, after climbing more than 4% in the previous session. Concerns over 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 attack Iran before the November U.S. midterm elections. Traders remained sceptical that the war was close to ending. 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." He said any indication the White House was reconsidering military action could send oil prices sharply higher, especially with tanker traffic through the Strait of Hormuz under significant pressure.
Higher energy costs, expectations of central-bank rate hikes and concerns about rising government debt had fuelled a global bond sell-off lasting months. Borrowing costs reached multi-decade highs. Charu Chanana, chief investment strategist at Saxo, said long-term yields had returned to multi-decade highs, leaving investors without the low-cost-of-capital conditions that had supported AI growth valuations. She said higher sovereign yields and corporate issuance to fund AI infrastructure meant capital was becoming "both more expensive and more selective".
France, Treasuries and the Euro
Investors watched France's debt load, budget deficit and political outlook closely ahead of the 2027 presidential election. ING analysts said French bond spreads faced more than half a year of higher volatility and continued elevation, with the two election rounds scheduled for April and May next year.
U.S. Treasury markets steadied after solid auctions that week. The benchmark 10-year yield held at 5.226%, near the 24-year high it reached on Oct. 7. ING analysts said the pause didn't mean the bond-market sell-off was over.
The dollar remained strong, while the euro looked set for a fifth straight week of losses. The euro last traded at US$1.122, around the 17-month low it touched earlier in the week amid concerns about French debt.