Asian equities fell on Friday, setting up a second consecutive weekly decline, as traders grappled with soaring energy prices, volatile bond markets and the staggering sums required to finance the next wave of artificial‑intelligence investment.
Trump’s Iran stance eases geopolitical risk
President Donald Trump told reporters on Thursday that the United States will not launch a military strike against Iran before the November midterm elections. He emphasized that the administration remains committed to a diplomatic path and will not jeopardize the election season with new combat operations.
“The big question for markets is whether Trump sticks to his word if Iranian attacks intensify,” said Nick Twidale, chief market strategist at ATFX Global. Twidale warned that any hint the White House might reconsider its position could send oil prices sharply higher, especially given the already‑tight tanker traffic through the Strait of Hormuz.
Energy and bond markets add pressure
Brent crude futures traded at $103.70 per barrel in Asian hours after a more than 4% surge the previous session, a move sparked by renewed concerns over the war in the Middle East and its inflationary impact. The higher oil price feeds into broader market anxiety.
At the same time, a toxic mix of elevated energy costs, expectations of further central‑bank rate hikes and rising sovereign debt levels has driven a global bond sell‑off. Long‑term yields have climbed back to multi‑decade highs, stripping away the cheap‑capital environment that previously fueled AI‑focused growth.
“With long‑term yields back around multi‑decade highs, investors no longer have the luxury of valuing AI growth in a low‑cost‑of‑capital world,” said Charu Chanana, chief investment strategist at Saxo. Chanana added that higher sovereign yields and increasing corporate issuance to fund AI infrastructure mean capital is becoming both more expensive and more selective, putting balance sheets and future earnings quality under close scrutiny.
Tech stocks feel the squeeze
U.S. technology shares led Wall Street’s main indexes lower after a report revealed OpenAI’s annualised revenue was $20 billion less than the company had previously signalled. Chris Weston, head of research at Pepperstone, described the market reaction as a “sea of red” across technology, AI infrastructure and semiconductor stocks, noting that investors are now more selective about exposure and pricing for future growth.
Investors are also watching a massive fundraising round that could involve SpaceX, Broadcom and Oracle, each expected to raise billions to purchase high‑end AI chips. Meanwhile, Australia’s Firmus, a data‑centre operator backed by Nvidia, cancelled its $5 billion initial public offering, opting instead for a private fundraising round amid market volatility.
Global backdrop
France’s debt load, budget deficit and political outlook ahead of the 2027 presidential election have added to market unease, with French bond spreads expected to remain volatile for more than half a year, according to ING analysts.
U.S. Treasury markets showed a brief reprieve as solid auctions this week helped steady the benchmark 10‑year yield at 5.226%, though it remains near the 24‑year high reached earlier in the week.
In currency markets, the dollar stayed strong while the euro slipped for a fifth straight week, hovering around $1.122 amid French debt concerns.
Overall, the combination of elevated energy costs, higher borrowing rates and uncertainty over AI funding continues to challenge investors, even as the Trump administration maintains a steady foreign‑policy course that seeks to avoid new military escalations before the upcoming midterms.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
