This is Why Asian Stocks Weakened!
Asian stock markets weakened on Tuesday (June 23rd), following pressure on Wall Street after major technology stocks experienced a correction. The MSCI Asia Pacific regional stock index fell as much as 0.7% at the start of trading, while S&P 500 futures also weakened. Market sentiment was weighed down after large-cap technology stocks in the United States fell, along with rising bond yields, which made investors cautious about riskier assets.
The greatest pressure came from the technology sector, particularly after SpaceX shares fell for a third consecutive day, wiping out a significant amount of market value. Elon Musk's company plummeted after announcing plans to sell a large amount of investment-grade bonds. This move was seen as part of a significant funding need to support the expansion of artificial intelligence (AI), but at the same time raised new concerns about the size of technology companies' capital spending.
Concerns about AI spending also extend to a number of other large companies. Alphabet, Amazon, and several other tech giants have previously raised significant funds through the debt markets to support AI projects. Investors are beginning to question whether these giant investments can yield commensurate returns in the near term. Therefore, Micron Technology's financial report this week will be a key focus to determine whether the AI trend remains strong enough to support the tech stock rally.
Meanwhile, geopolitical sentiment remains a factor the market is closely monitoring. Brent oil prices held steady around US$78 per barrel after falling sharply in the previous session. This decline occurred after the United States issued a 60-day temporary license allowing Iran to sell some of its oil to the international market. This policy raised hopes that energy supplies from the Persian Gulf could recover, although peace talks between the US and Iran still face a number of fundamental differences.
Despite the hope for a US-Iran peace process, the market remains unsettled. Investors are still awaiting this week's US Personal Consumption Expenditures (PCE) data, the Federal Reserve's favorite inflation indicator. Following the Fed's continued hawkish statement, market participants are eager to see whether expectations of an interest rate hike are still justified. If inflation data reemerges, pressure on technology stocks and risk assets could persist. However, if inflation subsides, the market could receive a fresh boost to recover. (asd)
Source: Newsmaker.id
