Key facts
- Asian stocks showed mixed performance on Wednesday, with the MSCI Asia-Pacific index up 0.4%.
- Crude oil prices extended declines, hovering near four-month lows.
- The U.S. dollar reached a 13-month high against a basket of major currencies.
- Analysts expressed concerns about market instability, stretched AI valuations, and uncertainty surrounding U.S.-Iran peace talks.
- Investors awaited earnings from Micron Technology for insights into the AI chip sector.
Asian stocks traded with mixed performance on Wednesday, while crude oil prices extended their decline to hover near four-month lows. Analysts expressed caution regarding renewed volatility stemming from stretched artificial intelligence valuations and uncertainty surrounding potential peace talks between the U.S. and Iran.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4% after fluctuating throughout the session. South Korean stocks, which experienced a sharp 10% drop on Tuesday, rallied 3.5%. In contrast, Japan's Nikkei index shed 0.4%, and Taiwan stocks lost 1.9%.
Market analysts noted the alarming price action in recent trading days, suggesting market instability. Oil prices fell over 1%, influenced by signs that more oil tankers might move out of the Strait of Hormuz. However, concerns persist regarding the durability of a U.S.-Iran accord due to conflicting accounts on agreed terms, including nuclear inspections and control of the Strait.
European futures were largely down, with Euro Stoxx 50 and German DAX futures falling 0.3%, and FTSE futures dropping 0.67%. U.S. futures showed minimal change. The yield on benchmark U.S. 10-year notes slipped slightly to 4.487%.
Investors were anticipating earnings from memory chipmaker Micron Technology, which could provide direction for the AI chip sector following a significant rally. In currency markets, the U.S. dollar index climbed 0.07% to a 13-month high of 101.46. The Japanese yen weakened against the dollar, trading at 161.53, raising market alertness for potential intervention. A summary of the Bank of Japan's recent meeting indicated discussions on inflation risks and calls for faster interest rate increases. The euro weakened 0.15% to $1.1364, and sterling eased to $1.3192. Spot gold fell 1.1% to $4,064.01 an ounce, reaching a near two-week low. In cryptocurrencies, bitcoin saw a slight gain of 0.2%, while ether experienced a minor loss of 0.2%.