Tech leads losses as Asian stocks track Wall Street selloff

HONG KONG - Technology stocks experienced a significant decline on Wednesday (Aug 19) as investors grappled with rising bond yields, surging oil prices, and persistent inflation concerns. The market downturn mirrored a similar trend on Wall Street, where firms with heavy investments in AI and semiconductors faced sharp losses, marking a setback to a recent recovery following a dismal July.

The Middle East crisis, with the US and Iran locked in a standoff, is contributing to the upward pressure on crude prices, as traders anticipate the strait remaining closed.

The yield on a 30-year US Treasury hit its highest level since June 2007, while 10-year yields remain elevated compared to pre-February Iran strikes. This has intensified borrowing costs and driven up US government debt expenses. Tech giants like Nvidia, Intel, Micron, and Broadcom have taken a beating, dragging the Nasdaq and S&P 500 down.

In Asia, South Korea's Kospi, a key indicator of the AI tech boom, slipped over 5%, while SK hynix and Samsung each fell more than 7%. Tokyo's Nikkei dropped over 2%, with Kioxia down around 10% and SoftBank underperforming. Shanghai, Taipei, and Manila also reported declines of more than 1%. Hong Kong, Sydney, Singapore, and Jakarta also saw stock market losses.

Analysts warn that higher yields could lead to increased borrowing costs for hyperscalers, potentially impacting AI infrastructure companies.

Crude oil prices surged past $92 a barrel, fueling concerns about potential inflationary pressures. The Federal Reserve is facing pressure to raise interest rates to curb inflation, which has been hovering around the bank's 2% target for five years. The upcoming gathering of central bankers and finance heads in Jackson Hole, Wyoming, will be closely watched for insights into the Federal Reserve's future plans.

Minutes from the bank's latest policy meeting, released later Wednesday, may provide a hint about the central bank's stance.