Asian Markets Dip as AI Buzz and Middle East Tension Steer Investors Toward Safety

Asian stock indices slipped during the trading day, with Japan’s market mirroring a decline seen on U.S. exchanges after mixed signals from tech giant Nvidia. Investors shifted away from riskier assets, turning instead to the yen and U.S. Treasury bonds for steadiness.

Key Points
• Nvidia’s earnings beat expectations but shares stayed flat after hours.
• U.S. equity futures for the S&P 500 and Nasdaq fell about 0.4% during Asian trading hours.
• The dollar strengthened slightly; the yen gained ~0.2% against the dollar.
• U.S. Treasury yields eased: 10‑year at ~4%, 30‑year below 4.7%.

Market Reaction

• Tech Sector: The broader tech sector felt pressure, reflected in a drop of about 0.4% in U.S. equity futures for the S&P 500 and Nasdaq indices during Asian trading hours.
• Currency Markets: The dollar strengthened slightly against a basket of currencies, while the Japanese yen gained about 0.2% against the dollar.
• Bond Market: The U.S. Treasury yield curve eased modestly, with the 10‑year note falling to just over 4% and the 30‑year note below 4.7%.

Economic Data

• Japan: Inflation slowed and factory output weakened, complicating the case for higher interest rates by the Bank of Japan.
• China: The central bank announced a move to cut foreign‑exchange risk reserves for certain forward contracts, aiming to lower the cost of dollar purchases. The yuan continued its upward trend against the U.S. dollar, breaking a psychological barrier not crossed since 2020.

Political and Commodity Outlook

• United Kingdom: A closely watched by‑election in Greater Manchester could influence political dynamics. The result is expected to be tight among Labour, Reform UK, and the Greens, potentially adding pressure on Prime Minister Keir Starmer after recent policy shifts.
• Commodities: Gold held steady at around $5,175 per ounce and crude oil edged up slightly to about $65.27 a barrel.
• Cryptocurrencies: Bitcoin fell to roughly $67,290 and Ethereum to about $2,017.