Asian shares slipped on Friday after the Nasdaq fell more than 2% on worries about AI funding needs. US Treasuries posted their biggest single-day rally in more than three years, and traders scaled back Fed rate hike bets. Oil, meanwhile, rose to a five-month high.
Asian shares slipped on Friday after Wall Street's tech sector took a hard fall overnight, with the Nasdaq dropping more than 2%. Investors worried about how much money the artificial intelligence boom needs.
Meta's cash outflow triggers a move into bonds
The trigger was Meta Platforms, which reported its first cash outflow in more than a decade. Its shares fell about 8%.
As a result, US Treasuries posted their biggest single-day rally in more than three years. The 10-year yield fell 19 basis points to approximately 4.96%, a large daily move for the benchmark bond. A basis point is one-hundredth of a percentage point.
Rate hike bets fade
Traders also cut their expectations for further tightening from the Federal Reserve, removing almost a full quarter-point rate hike from pricing for next year. A December increase is no longer fully priced, as the implied probability of a hike at that meeting dropped to 85%.
Asian indexes follow Wall Street lower
Regional stock indexes fell, though the declines were mixed. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%.
Japan's Nikkei dropped 1.3%. South Korea's KOSPI fell 1.7%, with semiconductor stocks such as SK Hynix under pressure, and it is on track for a 4.3% weekly decline.
Oil complicates the outlook
Oil climbed while tech slid. Brent crude traded between $110 and $113 per barrel, a five-month high, on supply concerns in the Middle East.
That leaves central bankers with a mixed picture. Weaker tech and falling yields point to softer growth, while expensive oil points to sticky inflation. Elevated oil prices and Middle East supply tensions could revive inflation fears and push yields back up, which would undercut the bond rally.
Source: Crypto Briefing
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