Asian stocks fell for a second consecutive day as the record rally in chip stocks lost momentum and higher US inflation raised expectations that the Federal Reserve may need to raise interest rates next year. Bond prices dropped.
The MSCI Asia-Pacific Index dropped 0.5%, with South Korea’s stock market (a barometer for the artificial intelligence and semiconductor sectors) plunging 2.8%. Shares of Samsung Electronics fell as much as 3.9% after the company’s negotiations with its labor union broke down, heightening the risk of a strike. Wall Street’s benchmark indexes retreated on Tuesday, dragging down U.S. stock futures, and the chipmaker index declined 3%. The Asian semiconductor index fell for the second consecutive day.
The core consumer price index in the United States rose faster than expected, pushing the yield on two-year US Treasury bonds to nearly 4% and the yield on 30-year bonds to 5.03%. Government bond prices in Japan and Australia also declined.
As the US-Iran peace talks have made little progress and the Strait of Hormuz remains closed, Brent crude oil fell by 1% to around $106.60 a barrel after rising for three consecutive days, easing market risk aversion. The US dollar, the preferred safe-haven asset during the Middle East conflict, held onto its gains from the previous two days.
High oil prices and escalating inflation risks are threatening the momentum of the stock market’s rebound from war-induced lows. Previously, the rally was driven by gains in semiconductor stocks and strong earnings performances from large technology companies. The sharp rise in chipmakers’ share prices has raised calls for a pause in the rally, with concerns that their valuations have risen too high and too fast based on expectations that huge investments in the artificial intelligence sector will translate into profits.
Kazunori Tsubo, chief strategist at DAI-ichi Life Insurance Asset Management, said: “Strong US CPI data has increased the possibility of the Federal Reserve taking a more hawkish stance, and the rising US Treasury yields are seen as a drag on the stock market. What is worrying is that this could intensify the pressure on growth stocks leading the market, such as those in artificial intelligence and semiconductors.”
In April, inflation in the United States accelerated, outpacing wage growth and further straining consumers who were already struggling. The consumer price index (CPI) rose by 3.8% year-on-year, marking the largest increase since 2023. The core CPI, which excludes food and energy prices, rose by 2.8%.
Tim Urbanowicz of Innovator ETFs, a unit of Goldman Sachs Asset Management, said that before the report was released, the market had already fully priced in the expectation of rate cuts in 2026. He added that as long as the 10-year US Treasury yield remains below 4.5%, it will not have a substantial adverse impact on the stock market.
Technical analysis:
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Gold: Yesterday, our plugin provided two operation alerts for catching rebounds after sweeping liquidity in the yellow zones. The one near 4680 was unsuccessful, but the one near 4639 was triggered immediately, achieving a profit-to-loss ratio of more than three times. For today, we will continue to wait for the price to sweep liquidity and then consider the long signal for catching rebounds. We will pay attention to the 4680 level again. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: After the overnight price retraced to the green zone we alerted through the plugin, it began a significant rebound. Although there was a slight spike that broke through, the general direction was still captured. For the intraday trading, we first consider a secondary test of the liquidity in the 28,800/28,850 area before starting to catch the rebound signal; or if the price breaks out directly, we can first catch a short-term long position with a risk-reward ratio of 1:1 to lock in some profits. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, we were hoping to see a price surge followed by a pullback, but in the end, the price broke through the yellow zone without a pullback, and our sell stop operation couldn’t be executed. For today, we will continue to monitor the opportunity to sell after a rebound once the price resumes its downward signal. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
20:30 U.S. Producer Price Index for April (year-on-year)
