Stock Losses Build as AI Rally Cools, Oil Gains: Markets Wrap

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June 8, 2026 - 06:07

7 minutes

(Bloomberg) — Stocks and bonds dropped as investors faced a trio of headwinds with a pullback in the artificial-intelligence trade, mounting bets on a US interest rate hike and rising oil prices due to a worsening of the Middle East conflict.MSCI’s Asian equity gauge slid 2.8%, with South Korea’s Kospi index dropping about 5%. A slump in chip firms forced a brief halt in the South Korean benchmark, the world’s best-performing gauge this year on the back of the AI trade. Stocks also fell in Japan and Taiwan with tech shares leading losses. Futures contracts pointed to a 1% drop in European shares.Brent crude climbed 3.5% to above $96 a barrel after Israel said it struck several military targets in Iran, retaliating against missile attacks by Tehran. Higher oil prices will add further pressure to inflation, and that coupled with strong US jobs data, helped boost bets for higher Federal Reserve interest rates.The simultaneous retreat in stocks and bonds marks the biggest test in months for a bull market that has been fueled by easing geopolitical risks and the AI boom. Investors are now contending with a plethora of negatives: doubts whether the rally has run too far and too fast, renewed fighting in the Middle East, higher oil prices and inflation pressures prompting central banks to raise rates.“It’s almost as if traders suddenly woke up to a different reality this week, one where strong US jobs data, rising rate-hike fears, and lingering geopolitical risks are taking center stage over the AI euphoria,” said Tim Waterer, chief market analyst at KCM Trade.On Friday, Wall Street’s historic weekly run came to a halt as the selloff in tech stocks gathered momentum. The Nasdaq 100 Index sank 4.8%, while growing anxiety about valuations sent the S&P 500 down 2.6%. A gauge of chip stocks slumped 10%.Chipmakers were weak across Asia as well. Samsung Electronics Co. tumbled as much as 11%, SK Hynix Inc. lost 10% and Taiwan Semiconductor Manufacturing Co. slid 5.7%.Concerns about an AI bubble have also resurfaced, with a number of investors warning that the market is exhibiting characteristics of a boom that will eventually unravel.“In the longer run, this will prove to be a technical correction, albeit a scary one in a longer-term bull market,” Goldman Sachs Group Inc. Chief Asia Pacific regional equity strategist Tim Moe said on Bloomberg TV. “The issue here is one that stocks have gone up a lot, there is lot of profit to be taken, there is clearly some signs that speculative activity increased, particularly for retail investors in Korea.”While Asia reacted to Friday’s selloff on Wall Street, sentiment toward US tech stocks steadied as Nasdaq 100 futures erased earlier losses to rise 0.6%. Contracts for the S&P 500 Index also wiped out declines at the open to climb 0.2%.Elsewhere, the dollar, the haven of choice since the Middle East conflict began, gained against most of its Group-of-10 peers. Treasuries extended declines on Fed rate-hike bets and concerns about inflation from higher oil prices. The Treasury 10-year yield climbed four basis points to 4.57%.Indonesian bonds extend losses as the 10-year yield rose more than 30 basis points, deepening the rout in the nation’s assets. Japan’s 10-year government bond yield also rose.Meanwhile, Bitcoin climbed 2% to about $63,000 after falling below the $60,000-mark on Friday for the first time since Donald Trump won reelection in 2024. The cryptocurrency has lost about half its value since reaching a peak above $126,000 in October last year.In geopolitical news, Israel said it struck several military targets in Iran, retaliating against missile attacks by Tehran despite Trump’s call for Prime Minister Benjamin Netanyahu to refrain from hitting back.The exchange is one of the most serious tests of a ceasefire that took effect on April 8 to halt fighting involving the US, Israel and Iran. It comes as the US and Iran appear to be making little progress toward an interim agreement to end the war, even as Trump has repeatedly said a deal is near.Another factor for investors to consider was the solid US jobs report. While there was a lot to like in Friday’s economic data, the figures came at a time when inflation risks are challenging the Fed. US job growth topped all forecasts in May and the unemployment rate held steady at 4.3%, offering the clearest sign yet that the labor market may be breaking out of a prolonged period of lackluster hiring.Interest-rate swaps indicated traders expect a quarter-point Fed hike by the December policy meeting, with a roughly 60% chance of a move in October. Higher US interest rates tend to drain capital from emerging markets, strengthen the dollar and raise borrowing costs, creating a tougher backdrop for equities.Attention now turns to Fed policymakers’ next meet June 16-17 under the leadership of new Chairman Kevin Warsh.“The massive US payrolls surprise has landed like a cold shower on a market priced for perfection,” said Hebe Chen, an analyst at Vantage Global Prime. That’s “forcing investors to confront stretched valuations, crowded positioning and the renewed threat of higher-for-longer rates.”Corporate Highlights:OpenAI is readying a major platform overhaul ahead of its highly anticipated IPO later this year to better compete with rivals such as Anthropic, the Financial Times reported. Nvidia Corp. Chief Executive Officer Jensen Huang said its new Vera central processing units will use SK Hynix Inc.’s memory chips as the two companies prepare to do more business in the coming year. A consortium of French telecommunications companies have agreed to buy billionaire Patrick Drahi’s SFR in a deal that values the country’s second-largest mobile carrier at €20.4 billion ($23.5 billion) including debt. Some of the main moves in markets:StocksS&P 500 futures rose 0.2% as of 1:04 p.m. Tokyo time S&P/ASX 200 futures fell 1.4% Japan’s Topix fell 2.7% Hong Kong’s Hang Seng fell 1.2% The Shanghai Composite fell 1.3% Euro Stoxx 50 futures fell 0.9% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1531 The Japanese yen was little changed at 160.34 per dollar The offshore yuan was little changed at 6.7860 per dollar CryptocurrenciesBitcoin rose 1.8% to $62,979.75 Ether rose 2.9% to $1,674.51 BondsThe yield on 10-year Treasuries advanced four basis points to 4.57% Japan’s 10-year yield advanced five basis points to 2.715% CommoditiesWest Texas Intermediate crude rose 3.4% to $93.65 a barrel Spot gold fell 0.3% to $4,315.54 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Abhishek Vishnoi.©2026 Bloomberg L.P.