Hong Kong : Asian stock markets closed lower on Thursday as the recent artificial intelligence (AI)-driven rally lost momentum following a weak session on Wall Street. Technology stocks led the decline across the region, while crude oil prices traded in a narrow range as investors assessed the possibility of a diplomatic agreement involving Iran that could ease geopolitical tensions in the Middle East.
Market participants also shifted their focus toward the upcoming U.S. nonfarm payrolls report, which is expected to influence the Federal Reserve’s next interest rate decision.
Asian Equities Fall as Technology Stocks Lead Losses
The MSCI Asia-Pacific Index (excluding Japan) declined 0.69%, reflecting broad weakness in regional equity markets.
Among the major indices:
- South Korea’s stock market fell 3.64%, recording the steepest decline in the region.
- Japan’s Nikkei 225 dropped 1.57%.
Technology companies bore the brunt of the selling pressure.
Major Tech Stocks Decline
South Korea
- Samsung Electronics declined 2.44%.
- SK Hynix dropped 6.95%.
Japan
- Kioxia Holdings plunged 9.61%.
- Tokyo Electron fell 4.61%.
The losses reflected investor caution after several high-profile technology companies reported earnings that, while solid, failed to meet elevated market expectations.
Wall Street AI Rally Loses Steam
The weakness in Asian markets followed a softer overnight session on Wall Street, where the Nasdaq Composite ended its multi-day winning streak.
Investor sentiment weakened after quarterly earnings from major technology companies failed to sustain the AI-driven rally.
Although SpaceX, led by Elon Musk, reported faster-than-expected returns from its AI investments, investors remained concerned about whether its profitable Starlink satellite internet business could continue financing large-scale investments in AI infrastructure and data centres over the long term.
Meanwhile, Advanced Micro Devices (AMD) reported quarterly results that exceeded analysts’ estimates but failed to satisfy investors’ exceptionally high expectations, contributing to broader selling across semiconductor stocks.
Oil Prices Stable Amid Iran Peace Negotiations
Despite weakness in equity markets, crude oil prices remained relatively stable as investors evaluated reports suggesting possible progress toward a diplomatic agreement involving Iran.
According to regional sources, a proposed agreement between Iran and Oman aimed at ending nearly five months of conflict between Iran and the United States could allow Tehran greater authority over ships entering the Strait of Hormuz, one of the world’s most strategically important oil shipping routes.
Latest Oil Prices
- Brent Crude: US$79.31 per barrel, down 0.18%.
- West Texas Intermediate (WTI): US$74.96 per barrel, down 0.35%.
Analysts believe that if diplomatic efforts succeed, concerns over potential supply disruptions could ease, helping stabilize global energy markets.
However, Madison Cartwright, Senior Geo-Economics Analyst at the Commonwealth Bank of Australia, cautioned that while an agreement could be reached by early September, negotiations remain uncertain.
He noted that Iran is likely to seek additional concessions before finalizing any long-term arrangement.
Focus Shifts to U.S. Jobs Report
Global investors are now awaiting the release of the U.S. July Nonfarm Payrolls Report, scheduled for Friday, as it is expected to provide fresh insights into the health of the world’s largest economy.
Recent employment data has already indicated signs of slowing momentum.
According to ADP employment figures released on Wednesday:
- Private employers added 44,000 jobs in July.
- Job creation slowed from 95,000 in June.
- The figure was approximately 25,000 below market expectations.
Economists surveyed expect the official government report to show:
- 80,000 new jobs added in July.
- 57,000 jobs were added in June.
- Unemployment rate expected to remain unchanged at 4.2%.
The report will play an important role in shaping expectations for future U.S. monetary policy.
Federal Reserve Rate Expectations
Following the latest labour market data, investors modestly reduced expectations for another Federal Reserve interest rate increase.
According to the CME FedWatch Tool, financial markets are currently pricing:
- 54% probability of a rate hike at the September Federal Reserve meeting.
- Down from 58% a day earlier.
Meanwhile, the yield on the benchmark U.S. 10-year Treasury bond eased slightly to 4.607%, reflecting increased demand for safer assets.
Currency Market Remains Calm
The U.S. dollar traded largely unchanged against the Japanese yen, with the exchange rate holding near 157.66 yen per dollar.
The stability follows last week’s rare joint currency market intervention by Japan and the United States, aimed at supporting the yen after its sharp depreciation.
Market analysts believe the currency pair is likely to remain range-bound until the release of the U.S. employment data.
Gold and Silver Gain as Safe-Haven Demand Rises
Precious metals benefited from cautious investor sentiment.
Latest Precious Metal Prices
- Spot Gold: Rose 1.06% to US$4,290.26 per ounce.
- Spot Silver: Increased 0.65% to US$62.48 per ounce.
The gains reflected increased demand for safe-haven assets amid uncertainty surrounding global equity markets, geopolitical developments, and monetary policy expectations.
Market Outlook
Global financial markets remain focused on three major factors:
- Corporate earnings, particularly in the technology sector.
- Developments in Iran-U.S. diplomatic negotiations and their impact on energy markets.
- The upcoming U.S. employment report, which could significantly influence the Federal Reserve’s next policy decision.
While the recent AI-driven rally has temporarily lost momentum, investors continue to monitor economic data, geopolitical risks, and corporate performance for clearer direction in the weeks ahead.
