- Asian stock markets fluctuated lower on Thursday, mainly due to the resonance effect of the latest U.S. inflation data exceeding expectations and rising geopolitical risk premiums. The closure of the Strait of Hormuz following a new round of U.S. airstrikes on targets in Iran led Brent crude futures (BRN1!) to rise to $94.55 per barrel.
- The three major U.S. stock indices fell sharply due to inflation concerns, with the Nasdaq Composite Index (IXIC) dropping by 2%, and a noticeable correction in technology sector valuations. Oracle (ORCL:US) saw its stock price fall nearly 9% after hours, following the announcement of a capital expenditure plan and significant financing needs that exceeded expectations, further exacerbating market concerns about the return on investment in AI infrastructure and debt burdens.
- There is a marginal change in macro policy expectations, with federal funds futures pricing the probability of a Fed rate hike in October at 51.6%, and risk aversion sentiment keeping the dollar index (DXY) at a high level. Meanwhile, global investors are holding their breath for the upcoming European Central Bank (ECB) rate decision, with the market widely expecting it to advance the rate hike process.
Escalating Geopolitical Conflicts and Pressure on Energy Supply Chains
The U.S. military announced a new round of airstrikes on multiple targets in Iran, escalating geopolitical tensions once again. In retaliation, Iran announced the closure of the strategically significant Strait of Hormuz. This news spurred a rapid influx of safe-haven buying in the commodities market, with Brent crude futures rising 1.6% during the Asian session to $94.55 per barrel. Market analysts pointed out that if the Middle East situation cannot reach a peace agreement in the short term, global supply chains and energy transport routes will face ongoing disruption risks, and the marginal rise in oil prices may further solidify inflationary pressures in major global economies.
Revaluation of Technology Sector Valuations and Concerns Over AI Capital Expenditure
Asian technology heavyweight stocks were the first to bear the brunt of this sell-off, with the MSCI Asia Pacific ex-Japan Index (.MIAPJ0000PUS) down 1%, and both the Taiwan Weighted Index (TWSE:TAIEX) and the Nikkei 225 Index (NI225) falling by 1.5%. The Korea Composite Stock Price Index (KOSPI) fluctuated violently between gains and losses, dropping as much as 4.4% in early trading. Another core driver of weakened market sentiment came from the corporate side, with Oracle falling 8.9% in after-hours trading, mainly due to its fiscal 2027 capital expenditure plan far exceeding Wall Street expectations, and plans to finance nearly $40 billion through a combination of debt and equity. This indicates a cautious sentiment in the market towards technology companies advancing AI infrastructure construction through high debt, and if profit growth cannot match the pace of capital expenditure, the technology sector may face larger-scale position adjustments.
Solidifying Inflation Path Drives Reassessment of Rate Hike Expectations
On the macro level, the latest U.S. inflation data showed the fastest year-on-year growth since April 2023. Although this data aligns with market consensus, it still reinforces the market's judgment of inflation's stickiness. As a result, the CME's FedWatch tool shows that traders' expectations for a Fed rate hike at the October 28 policy meeting have shifted from holding steady the previous day to 51.6% currently. The yield on the U.S. 10-year Treasury note rose slightly by 1 basis point to 4.5483%. The marginal forward shift in interest rate asset pricing directly suppresses high-valuation assets, and if core inflation does not show a clear downward trajectory in the coming months, the global liquidity environment may remain tight for a longer period.
Accumulation of Safe-Haven Buying in Forex Market and Approaching ECB Decision
Amid global risk asset pressure, the dollar index remained stable around 100.03, reaching its highest level since early April when U.S.-Iran talks began, highlighting the dollar's appeal as a safe-haven asset. Forex market volatility narrowed ahead of the European Central Bank's rate decision, with the euro against the dollar (EURUSD) rising slightly by 0.1% to 1.1546. The market has fully priced in the ECB's rate hike expectations, with the focus shifting to the central bank's official statements on future growth and inflation paths. In the cryptocurrency market, as speculative capital outflows triggered by SpaceX's IPO eased, Bitcoin (BTCUSD) and Ethereum (ETHUSD) stabilized at $62,013.58 and $1,634.13, respectively, but geopolitical and macro uncertainties remain the main variables constraining digital asset rebounds.
