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June 24, 2026 - 01:23
6 minutes
(Bloomberg) — Stocks in Asia looked poised to extend Tuesday’s losses after a bruising Wall Street tech-led selloff deepened concerns that the artificial intelligence-driven equity rally may have run too far.Equity-index futures for Japan and South Korea pointed lower, while Hong Kong contracts indicated modest gains. Contracts for US equities edged lower in early Asian trading Wednesday after the tech-heavy Nasdaq 100 tumbled 3.3% and the S&P 500 fell 1.4% in the previous session. A closely watched semiconductor gauge — which had more than doubled from its war-driven lows — slumped about 8%.The risk-off mood drove investors into safer assets. Treasuries rose, while haven currencies including the Japanese yen and Swiss franc outperformed. US oil extended Tuesday’s declines as tanker traffic through the Strait of Hormuz became more visible following an interim peace agreement between the US and Iran.The selloff in equities came as markets prepare to close out the first half of the year with some blockbuster gains driven by easing geopolitical tensions, solid earnings and an AI trade revival. That’s despite growing concern over whether the massive spending commitments by technology firms will generate sufficient returns. Those worries, coupled with elevated valuations and crowded positioning, have triggered sharp pullbacks in the sector from time to time.“Whether or not we rally in the short-term, we continue to see medium-term downside risk for the tech/AI trade,” said Jonathan Krinsky, chief market technician at BTIG LLC, adding he sees between 10% and 15% additional downside in the semiconductors group.The US tech rout followed a sharp selloff across Asia on Tuesday that saw South Korea’s Kospi Index tumble, triggering a circuit breaker. AI-linked heavyweights SK Hynix Inc. and Samsung Electronics Co. each fell more than 10%. The broader MSCI Asia Pacific Index slumped 3.6%, the most since early March.Further volatility is expected in memory-chip stocks — an area that has accounted for the lion’s share of equity gains this year — as a local media report signaled SK Hynix is redirecting its efforts toward cheaper products.The backdrop sharpens the focus on memory chipmaker Micron Technology Inc.’s results Wednesday, which are expected to provide crucial cues on whether demand for AI infrastructure remains strong enough to sustain this year’s rally. Veteran strategist Louis Navellier said the report will be the grand finale to a “stunning” earnings season, noting that every dip should be viewed as a “buying opportunity.” The shares dropped 13% Tuesday but are still up more than 250% in 2026.“The risk-off trade reflects fear AI exuberance may be overdone,” said Chris Low at FHN Financial.Elsewhere in Asia, Indonesian assets will be in focus after MSCI Inc. again delayed its review of the nation’s equities, saying it needs more time to assess whether recently announced transparency reforms are working. MSCI had in January warned of a possible downgrade to frontier status due to investability concerns.The New York-based index provider also retained South Korea in its emerging-markets indexes.In fixed income, Treasuries advanced as the equity selloff and falling oil prices eased pressure on the Federal Reserve to raise interest rates to contain inflation. Swaps priced in slightly lower odds of more than one hike over the next year, leaving about 45 basis points of tightening implied by mid-2027.Yields fell roughly one to three basis points, led by shorter maturities that are most sensitive to changes in Fed policy. The two-year yield declined around three basis points to about 4.20%.“The market is pretty well priced for a more hawkish Fed outlook at this point,” with inflation-adjusted two-year yields the highest since the Fed began cutting interest rates in September 2024, said Izaac Brook, an interest-rate strategist at RBC Capital Markets.Corporate Highlights:FedEx Corp. posted quarterly earnings that topped Wall Street expectations and said profit would grow this year, a boost for the courier’s effort to simplify its business. SpaceX has drawn about $89 billion of demand for its debut US bond sale, according to people with knowledge of the matter, setting the stage for one of the biggest deals in the investment-grade market this year. Goldman Sachs Group Inc. equity traders are on the cusp of setting another record in the second quarter, with that business on track to generate more than $5 billion of revenue, according to people familiar with the matter. Apollo Global Management Inc. is once again limiting withdrawal requests from its largest non-traded private credit fund for retail investors, as broader concerns about the asset class persist. Some of the main moves on markets:StocksS&P 500 futures fell 0.2% as of 8:10 a.m. Tokyo time Hang Seng futures rose 0.8% S&P/ASX 200 futures rose 0.4% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1382 The Japanese yen was unchanged at 161.55 per dollar The offshore yuan was little changed at 6.7944 per dollar The Australian dollar was little changed at $0.6913 CryptocurrenciesBitcoin rose 0.1% to $62,465.05 Ether was little changed at $1,660.93 BondsThe yield on 10-year Treasuries declined one basis point to 4.50% Japan’s 10-year yield declined one basis point to 2.660% Australia’s 10-year yield was little changed at 4.77% CommoditiesWest Texas Intermediate crude fell 0.5% to $72.88 a barrel Spot gold fell 0.5% to $4,097.36 an ounce This story was produced with the assistance of Bloomberg Automation.©2026 Bloomberg L.P.
