INFRAME ASIA, BUSINESS – Asian stocks slipped on Friday and were on track for a second consecutive weekly decline as investors weighed higher energy prices, rising bond yields and the cost of financing artificial-intelligence projects. Brent crude traded near US$103.70 a barrel in Asian hours after jumping more than 4% in the previous session. The combination has revived concerns that inflation could remain stubborn and interest rates stay elevated.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.16% during Friday’s session. The index was heading for a weekly decline of more than 1%, reflecting continued pressure on regional risk appetite. Japan’s Nikkei also fell more than 1% as investors reassessed the outlook for global growth and borrowing costs.
Oil prices rose amid concerns about the conflict in the Middle East and possible disruption to shipping routes. Traders remained focused on the Strait of Hormuz, a key passage for global energy supplies. Any prolonged disruption could push transport and fuel costs higher for economies that rely heavily on imported oil.
Higher crude prices can feed into inflation by raising costs for businesses and households. Central banks may then have less room to lower interest rates, or could face pressure to keep monetary policy restrictive for longer. That prospect tends to weigh on equity valuations because future earnings are discounted at higher rates.
Bond markets have added to investor unease, with US Treasury yields recently hovering near levels not seen for more than two decades. Elevated yields can attract money toward dollar-denominated assets and away from emerging markets. This dynamic has put pressure on regional currencies and made financing more expensive for companies and governments.
Emerging Asian markets are particularly sensitive to oil-price movements because many economies in the region import much of the crude they consume. Higher energy bills can widen trade deficits and complicate efforts to control inflation. Investors have therefore been cautious about adding exposure while oil and yields remain volatile.
Recent sessions showed uneven performance across regional markets, with Singapore and South Korea among the hardest hit in one session earlier in the week. Singapore shares fell as much as 1.7%, while South Korea’s benchmark dropped around 2% on Wednesday. Taiwan’s market also edged lower after reaching a record high in the previous session.
Technology shares faced a separate source of pressure as investors examined the enormous sums needed to build AI infrastructure. Reports that companies including SpaceX, Broadcom and Oracle may seek billions of dollars in financing raised questions about competition for capital. Investors are increasingly assessing whether expected AI-related returns will justify the spending and borrowing required.
Sentiment also weakened after a report suggested OpenAI’s annualised revenue was below figures previously indicated. The news prompted renewed scrutiny of the pace at which AI investment can translate into revenue. Semiconductor shares and other technology-linked stocks came under pressure as investors reduced some positions.
South Korea’s Samsung Electronics had forecast a record quarterly operating profit driven by strong demand for memory chips used in AI systems. Its shares nevertheless fell in the broader market selloff, showing that strong company-specific results were not enough to offset macroeconomic concerns. Investors are watching whether chip demand can sustain earnings growth as financing costs rise.
Market participants are monitoring oil prices, government bond yields and upcoming corporate earnings for signs of a clearer direction. Further escalation in the Middle East could renew supply concerns, while easing tensions might help reduce the risk premium in energy markets. For now, the mix of inflation worries and questions over AI funding is keeping investors selective across Asian equities.
