(Oct 23) : Asian stocks were set to extend losses Friday, tracking a slump on Wall Street as a rout in technology giants and escalating Middle East hostilities drove investors toward the safety of bonds.

Equity-index futures for Japan, Australia and South Korea all fell, pointing to a second straight decline for a regional stock gauge after it dropped Thursday to the lowest since late July. 

US stock futures steadied in early trading after the Nasdaq 100 tumbled 2.9% and the Philadelphia Semiconductor Index sank 6.7%, their biggest declines since late June. The S&P 500 fell 1.2%, with Meta Platforms Inc. among the megacaps hit after investors parsed its results.

The risk-off move spread across markets. Treasuries staged their biggest rally in more than a year, sending the 10-year yield down about 17 basis points to 4.95%, while the yen outperformed all its major counterparts. Brent crude topped US$113 a barrel as deadly attacks in Saudi Arabia heightened concerns over supplies. Australian sovereign debt tracked the moves in Treasuries in early Asian trading.

Technology megacaps that have powered a four-year bull run in US equities bore the brunt of the selling. Mixed results from companies including Meta and Tesla Inc. added to concerns that the group’s rebound since late March had gone too far, too quickly.

“Sentiment seems to be shakier these days as investors reconsider AI-related assets,” said Eugene Leow, senior rates strategist at DBS Bank Ltd. “With US yields still elevated by recent standards, investors may want to hedge off some of these risks by seeking safety in Treasuries.”

Treasuries surged across the curve Thursday as the deepening rout in AI-related shares, turmoil in French markets and renewed Middle East tensions fueled haven buying. The rally pushed the 10-year yield below 5% for the first time in a month, with buying in Treasury futures accelerating as traders unwound bearish positions.

Concerns about the sustainability of artificial intelligence investment and its eventual payoff have knocked technology shares from recent highs and are beginning to weigh on the broader economic outlook. Traders also pared expectations for another Federal Reserve interest-rate increase this year.

Elsewhere, oil extended gains. A drone strike on Saudi Aramco’s Shaybah field killed two people without disrupting operations, while an attack on King Fahd International Airport caused casualties. Houthi rebels also claimed strikes on the Saudi port of Yanbu.

“It feels like just a risk-off day and tech is always the first to get hit,” said Joseph Saluzzi, partner and co-head of equity trading at Themis Trading LLC. “The bond rally also confirms the risk-off approach.” Investors are concerned that “post-election, the Iran war may escalate and potentially continue for a longer time than anticipated,” he added.

In Asia, Chinese stocks will be in focus after a US$2.4 trillion slide from their May peak pushed them into a bear market. Alibaba Group Holding Ltd. suffered its steepest drop in two months Thursday, helping drag the Hang Seng Tech Index down 5%, its biggest decline since April 2025, as weak consumption and concerns over AI profitability weighed on the market.

“Investor sentiment remains very poor for China’s onshore and offshore markets, and without new policy or tech catalysts, this kind of volatile, directionless environment may persist into early 2027,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore. 

uploaded by Isabelle Francis