Tech stocks struggle on AI spending worries, elevated yields

Asian markets saw a decline on Friday, with anticipation of a second consecutive weekly drop. This was due to investor concerns over high energy prices, bond market issues, and the large amounts required to fund AI investments. Brent crude prices reached US$103.70 per barrel in Asian hours, following a more than 4% increase the previous day due to Middle Eastern war fears and global rate hikes.

Donald Trump assured he wouldn't attack Iran before the November US midterm elections, but traders remained doubtful of any progress in ending the conflict. Nick Twidale, chief market strategist at ATFX Global, noted that any indication of a change in White House policy could cause oil prices to surge sharply. Tech stocks led Wall Street's main indexes down overnight after OpenAI reported AI revenue was $20 billion lower than initially claimed, which dampened investor sentiment.

The news triggered a shift away from tech, AI infrastructure, and semiconductors. MSCI's Asia-Pacific index outside Japan fell 0.16%, signaling a potential over 1% weekly loss. Europe's 10-year yield remained around a multi-decade high, dampening investment appetite in AI growth due to higher borrowing costs and the need for selective capital.