Asian stocks slipped broadly in choppy Tuesday trading as doubts over the durability of a Middle East ceasefire blunted the boost from AI optimism.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6%, having fluctuated between gains and losses as trading commenced. Regional declines were led by Korean shares tumbling as much as 3.3% after an initially higher open. S&P 500 e-mini futures were down 0.5%, while in Japan, the Nikkei 225 slumped 1.9%.
“This isn’t a re-rating of the AI trade; it’s profit-taking after a blistering run,” said Fabien Yip, a market analyst at IG in Sydney.
“Ceasefire negotiations between the U.S. and Iran have seen repeated false starts since April, and today’s lack of progress is no exception,” she said. “The market has grown accustomed to the back-and-forth.”
Brent crude slipped 0.6% to $94.45 a barrel after Lebanon announced a partial ceasefire between Hezbollah and Israel on Monday, retracing some of Monday’s gains after reports that Tehran had halted indirect negotiations with the U.S.
Markets remain cautious about progress in U.S.–Iran peace talks to end their three-month war, given the fragility of the April ceasefire.
Overnight, the S&P 500 closed 0.3% higher after ISM’s manufacturing PMI rose to 54.0 in May from 52.7 the previous month, beating expectations to reach the highest level in four years, likely driven by businesses front-loading orders amid rising prices and shortages because of the war with Iran.
“That the equity market is in boom mode is not up for debate,” despite higher energy prices and surging real interest rates, said David Rosenberg, founder and president at Rosenberg Research in Toronto, in a note to clients. “The S&P 500 is now up nine weeks in a row, a streak we last witnessed in late 2023.”
KOSPI CAPER
AI suppliers in Asia made gains after AI developer Anthropic said it had confidentially filed for a U.S. initial public offering, which could draw a trillion-dollar valuation. Alphabet shares slipped 0.7% in after-hours trading after the tech giant said it is looking to raise $80 billion in equity offerings, including an investment from Berkshire Hathaway, in an aggressive push to fund expansion of its AI infrastructure.
South Korean equities were especially erratic, with the benchmark swinging sharply as bellwethers like Samsung Electronics and SK Hynix flipped between gains and losses.
South Korea’s consumer price data were also thrown into the mix for markets, with inflation quickening in May to a more than two-year high, and bolstering expectations for a rate hike next month. Last week, the Bank of Korea signalled an imminent turn towards a more restrictive policy stance to curb inflation and support a slumping won.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, held steady at 99.21, firmly within the tight range it has sat in for the past three weeks.
The yield on the U.S. 10-year Treasury bond was down 2.8 basis points at 4.447%. Gold was up 0.1% at $4,487.53 in choppy trade.
Cryptocurrencies fell to two-month lows. Bitcoin was off 1.7% at $70,174.13, while ether tumbled 1.9% to $1,964.90.
(Reuters)
