Global equities remained under pressure on Friday as investors continued rotating out of AI-related stocks and into safer assets. MSCI’s Asia Pacific Index fell 0.5%, heading towards its lowest close since late July, while South Korea’s Kospi declined 0.6% after Thursday’s sharp sell-off in US semiconductor stocks. Asian equities were on track for a fourth consecutive weekly decline, their longest losing streak since April, as concerns over crowded AI positions weighed on sentiment.

Government bonds attracted strong demand following Thursday’s rally, which pushed the US 10-year Treasury yield down 17 basis points to 4.96%, below 5% for the first time in a month. Japanese government bonds also advanced, while the Yen held near 156.90 per Dollar after three consecutive sessions of gains. Meanwhile, spreads on higher-rated Asian corporate Dollar bonds widened to their highest levels since July, highlighting growing pressure across credit markets.

Oil extended its advance as escalating attacks on Saudi Arabia heightened concerns over wider supply disruptions across the Middle East. Brent crude was heading for a third consecutive weekly gain, with persistent tensions around the Persian Gulf keeping energy markets on edge. Gold slipped to around $4,010 an ounce, while silver declined 1.5%, despite continued demand for government bonds as investors sought protection against market uncertainty.

In Japan, the country’s key inflation gauge rose above the Bank of Japan’s 2% target for the first time this year, strengthening expectations of an interest-rate increase in December. The development adds to the divergence in global monetary policy expectations as investors reassess inflation risks and economic growth prospects.

Meanwhile, China tightened scrutiny of listed companies seeking to spin off business units for separate listings, potentially slowing deal activity. The Trump administration also moved to restrict US investment in Chinese biotechnology companies, threatening financial ties as American pharmaceutical firms increasingly rely on China for drug development.

Elsewhere, political uncertainty remained in Brazil ahead of Sunday’s runoff election, with a new poll showing Flávio Bolsonaro and President Luiz Inácio Lula da Silva tied. In Australia, the concentration of planned data centres around major cities is raising concerns over power-grid capacity and local opposition, potentially complicating the country’s ambitions to become a leading AI hub in the Asia-Pacific region.

With technology valuations under pressure, bond yields retreating and oil prices climbing, investors remain focused on the interaction between AI investment, geopolitical risks and inflation. Developments across the Persian Gulf continue to pose risks to energy supplies and the broader global economic outlook.

FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.

FISG — Interstellar Group