Asia report: Stocks down as bond sell-off sends Japanese yields to 30-year high

(Sharecast News) - Asian stock markets finished lower on Tuesday as sentiment remained dampened by the recent AI sell-off, while oil prices rose and Japanese bond yields climbed to their highest in three decades.

Tokyo's Nikkei 225 was more or less flat, but losses were recorded on most other major indices across the continent: the Hang Seng and Sensex both fell 1.0%, the Shanghai Composite fell 0.5%, the KOSPI fell 0.9% and the STI fell 1.4%.

Comments by Anthropic boss Dario Amodei have sent shockwaves across the AI, semiconductor manufacturing and data centre infrastructure/energy sectors this week, after he called for the pace of AI development to slow down due to "serious" risks associated with the rapid pace of advancements.

"I have become convinced that fully addressing the risks requires even more prudence - not just investing in risk prevention, but pacing the rate of capabilities advancement so that risk prevention has time to keep up," Amodei wrote in an online essay, which was publicly backed by OpenAI's Sam Altman and Elon Musk.

Losses in Tokyo were limited after heavyweight tech investor SoftBank rebounded strongly (+7.5%) following an 11% slump on Monday. However, losses continued for others such as Korean blue chips Samsung Electronics and SK Hynix, and China's MiniMax and Z.AI.

Bond yields were on the rise once again as speculation continues to mount about an impending rate hike by the Federal Reserve.

"Further disquiet across the Middle East region sent the oil price on another upward leg, with the current level edging towards $108 per barrel," said Richard Hunter, head of markets at Interactive Investor.

"Even though the Federal Reserve can do nothing to stem such rises, more general inflationary domestic concerns and heightened Treasury yields - the 10-year hit 5% which has not been seen since 2007 - the central bank may now have been boxed into a corner. The overwhelming consensus is that a 0.25% rise will come this week, with the distinct possibility of two more hikes to follow over the coming months."

To note, the 10-year US Treasury yield briefly touched 5% in October 2023, but has not held firmly above this level since 2007.

Japan's 10-year bond yield up 4.9 basis points at 3.042%, hitting new highs not seen since 1996, with markets also pricing in a Bank of Japan rate hike this week. Borrowing costs are already at their highest level - 1.0% - since September 1995, following a 25bp increase in June.