Asian-Pacific stocks tumbled sharply on Monday, extending the sell-off in U.S. tech shares from Friday, with the MSCI Asia-Pacific ex-Japan index dropping 1.2%. U.S. stock futures edged higher in a modest rebound, attempting to recover from Friday's over 1% decline. Meanwhile, commodities like gold, silver, and copper staged a strong rally, with gold nearing record highs. Bitcoin reversed earlier losses, climbing back to $90,000, signaling some stabilization in risk sentiment. The core of the current market turbulence lies in growing skepticism over the returns on AI investments.
Friday's tech-led slump in U.S. stocks reflected heightened doubts about whether the sector—which drove global benchmarks to record highs—can sustain lofty valuations. Marc Velan, Chief Investment Officer at Lucerne Asset Management in Singapore, noted that the risk-off mood in Asia was largely a spillover from the U.S. tech sell-off, with unwinding AI-related capital expenditure trades dampening global risk appetite.
This week, central banks worldwide are set to deliver key decisions. The Bank of Japan is expected to hike rates by 25 basis points to 0.75%, while the Bank of England may cut rates by the same margin to 3.75%. The European Central Bank is likely to hold rates steady. Investors will also receive delayed U.S. economic reports, including November’s jobs data and monthly CPI figures, postponed due to the government shutdown. Markets are scrambling for clues on the health of the U.S. economy amid the data drought.
Kyle Rodda, Senior Analyst at Capital.com, commented, "The 'Santa rally' isn’t kicking off amid fresh AI valuation concerns. While risks aren’t as elevated as last week, enough event risks remain to keep investors on edge—potentially sparking a year-end rally or deepening the sell-off."
**Key Market Moves:** - S&P 500 futures rose 0.3%, while Nasdaq 100 futures gained 0.2%. - Euro Stoxx 50 futures climbed 0.3%. - MSCI Asia-Pacific index fell 0.6%, with Japan’s Nikkei 225 down 1.3% and South Korea’s KOSPI also lower. - The dollar index was flat, while the yen strengthened 0.6% to 154.955 per dollar, nearing a one-week high. - 10-year U.S. Treasury yields dipped 1 basis point to 4.17%, while Japan’s 10-year yield rose 1 basis point to 1.955%. - Spot gold surged 1.1% to $4,347.42/oz, silver jumped 3% to $63.87/oz, and platinum rallied over 3%. - WTI crude rose 0.4% to $57.35/barrel, and Brent crude gained 0.4% to $61.35/barrel. - Bitcoin advanced 1.6% to $89,862, and Ethereum rose 1.9% to $3,140.8.
**Notable Updates:** - Spain’s IBEX 35 hit a record high, up over 1% intraday. - Silver extended gains, rising 3% to $63.87/oz. - Gold climbed over 1% to $4,347.42/oz. - Platinum futures surged 3% to $1,815.80/oz.
**U.S. Futures Rebound as Yen Rises on BOJ Hike Bets** U.S. equity futures edged up 0.3%, with S&P 500 e-mini and Nasdaq 100 futures attempting to recover from Friday’s steep losses. Analysts attributed the sell-off to growing doubts over AI-driven growth, highlighted by Nvidia’s recent slide, Oracle’s post-earnings plunge on rising AI costs, and deteriorating sentiment around OpenAI-linked firms.
Ed Yardeni of Yardeni Research downgraded the "Magnificent Seven" tech giants, citing uncertainties over AI adoption, development costs, and consumer willingness to pay—factors that could shape market direction.
This week, markets will monitor AI stocks and key delayed U.S. data, including November jobs and CPI reports, to gauge whether the Fed is nearing the end of its easing cycle after three consecutive cuts.
Ben Bennett of L&G Asset Management cautioned that shutdown-related data distortions require careful interpretation, adding, "We’ll need to wait until 2026 for a clearer U.S. economic picture."
The yen strengthened as bets mounted on a BOJ rate hike, with USD/JPY sliding to 154.95. The BOJ’s Tankan survey showed large manufacturers’ sentiment at a four-year high, reinforcing hike expectations. However, Governor Ueda’s recent dovish tilt may disappoint some investors.
**Gold, Silver, Copper Rally as Oil Edges Up** Gold extended its rally for a fifth day, approaching its all-time high of $4,381.21/oz, as investors fled Asian equities amid AI sector concerns. Silver also rose over 2% to $63.28/oz. Both metals are on track for their best annual performance since 1979, with gold up 60% and silver more than doubling this year.
Copper rebounded 1.5% in London, recovering from Friday’s 3% drop triggered by AI-related demand worries. Supply disruptions and pre-tariff U.S. imports have driven a 30% annual gain, with green energy investments underpinning long-term demand optimism. ANZ’s Brian Martin forecasts further market deficits in 2026.
Brent crude rose 0.4% to $61.35/barrel, and WTI gained 0.37% to $57.35/barrel, supported by U.S.-Venezuela tensions and supply concerns.
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