Stock markets in the Asia-Pacific region have been generally under pressure in recent days, driven by continued high international crude oil prices and rising yields on United States Treasury debt. Many media reports indicate that the 10-year United States Treasury debt rate of return has reached its highest level since 2007, that the price of superheavy crude oil has increased as a result of geographical tensions, and that global risk assets are under pressure to sell, and Asian markets have not been spared.
In terms of crude oil prices, Brent crude oil rose to approximately $99.73 per barrel, approaching the $100 threshold. The uncertainty of the situation in Iran is a major factor driving up oil prices - The market was concerned that the escalation of the situation in the Middle East might affect the crude oil transport corridor in the Strait of Hormuz, and the supply prospects of Saudi Arabia were disturbing for investors. Various reports indicate that tensions in Iran led to oil price hikes, directly raising energy cost expectations in Asian importing countries.
On the part of the debtor markets, United States Treasury debt was sold off, with a 10-year rate of return reaching a high since 2007. The upward trend in the rate of return meant that the cost of global financing had risen, particularly for emerging Asian and Pacific markets that were dependent on FDI. The high rate of return on bonds also suppresses the valuation space of the stock market, prompting the flow of funds from risky assets such as equities to fixed-income products.
The main Asian units are characterized by mixed performance. Japan rebounded on part of the trading day with a 225-day daily index, which showed an increase of over 600 points, close to 1 per cent, but the overall movement was more volatile than external factors. The Korea KOSPI index rose by about 0.9 per cent, the Taiwan weighted index rose by 0.8 per cent and hit a new high, and the Seoul and Taipei markets performed relatively strongly, driven by artificial intelligence and semiconductor plates.
However, downward pressure is equally significant. Hong Kong's henant index fell by about 1 per cent, the above-mentioned composite index fell slightly, and the Singapore Strait Times index fell by 0.2 per cent. The NIFTY index in India fell by 23,000 points, while the SENSEX index in India fell by nearly 1 per cent. Economies dependent on energy imports, such as Malaysia and Singapore, face greater pressure.
In addition to macro-level factors, the science and technology sector has been hit by additional shocks. The announcement by OpenAI of the suspension of some of its operations raised concerns in the market about the slowdown in the growth of the artificial intelligence industry, which led to a sharp decline in the Asian chip stock. According to multiple financial and economic media reports, this news has rekindled the fear of a possible slowdown in the AI investment cycle, with semiconductors and markets with high technology weights bearing the brunt.
However, there are positive signals. Enterprises such as Taiwan's telecommunications stock, Honghai and IDB are doing well after the new peak in NASDAQ and are expected to outperform market expectations in the third quarter. Some AI-related equities in Korea and Japan were similarly supported, indicating that the long-term demand base of the AI industrial chain still existed.
The summit between Trump and Xi did not provide a significant boost to the market. According to several media reports, the high-level meeting had yielded little in terms of alleviating market concerns about trade and geographical tensions, and investors had limited expectations of substantive policy breakthroughs. At the same time, interest rate decision-making by the United States Federal Reserve has become another focus of market attention – under the double pressure of oil prices and yields, the Fed’s policy direction will directly affect global capital allocation.
In the short term, the direction of Asia-Pacific stock markets depends on three key variables: first, the situation in Iran and the stability of oil prices, which, if transport risks in the Strait of Hormuz recede, would directly ease market anxiety; secondly, the outcome of the Federal Reserve interest rate resolution and its forward guidance, which will determine the continuation of debt market sales; and thirdly, the ability of AI and semiconductor plates to absorb the emotional impact of OpenAI's suspension.
For investors, the current environment means a significant increase in volatility. Energy-cost-sensitive aviation, shipping and manufacturing companies will be faced with profit squeezes, while oil and gas and defensive plates may fall. Agencies with significant dollar debt or dollar assets need to be concerned about the risk of further increases in rates of return. Exchange rates and capital flows in Asian emerging markets are also worth following closely — in the context of high rates of return on United States debt, the pressure on capital outflows may increase.
Market analysts point out that Asia-Pacific stock markets are expected to get breathing space if oil prices are maintained below $100 per barrel and the Fed releases pigeon signals; conversely, the double squeeze in energy prices and financing costs will continue to suppress regional risk preferences.