S&P500 And Nasdaq 100: US Stocks Risk Further Selling On AI Spending Doubts

Steady Liquidation by Veteran Holders Alters Market Structure

Fading Demand from ETFs and Retail Amplifies Imbalance

Market Psychology and Price Action Reflect Fatigue

Reactivation Nearing Saturation Point

Source: Bloomberg

Women holding umbrellas stand in front of a stock quotation board outside a brokerage in Tokyo, Japan June 30, 2025. REUTERS/Issei Kato

Asian shares fell on Thursday as the tech sector took a beating on renewed angst about AI spending, while investors braced for a wave of central bank meetings set to underscore policy divergence worldwide.

Geopolitical tensions are roiling the commodities markets. Oil prices extended a rebound from five-year lows after President Donald Trump ordered a "blockade" of all sanctioned oil tankers entering and leaving Venezuela. Silver hit a new record that helped pull up gold.

Sterling nursed losses after an unexpected drop in UK inflation all but guaranteed a rate cut from the Bank of England later in the day.

The European Central Bank, the Norges Bank and Riksbank are also due to deliver their policy decisions on Thursday, with focus squarely on the outlook as all three are widely expected to hold rates steady. In the region, traders are bracing for a rate hike in Japan on Friday though there is less certainty about the pace of tightening next year.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), fell 0.5% as South Korea (.KS11),dropped 1.3% and Hong Kong's Hang Seng index (.HSI),slipped 0.5%. Japan's Nikkei (.N225),was down 1.2%.

Nasdaq futures gained 0.3% and S&P 500 futures rose 0.2%, after a tech-led selloff on Wall Street as investors grappled with renewed concerns over record AI spending. Shares of AI bellwether Nvidia (NVDA.O), tumbled 3.8%.

Oracle (ORCL.N),plunged 5.4% after it announced an equity deal to support a data center project would not include a key partner Blue Owl Capital (OWL.N), The stock has shed almost 50% from mid-September when a deal with OpenAI sparked a 35% one-day rally.

"Oracle remained the primary source of anxiety... This latest setback deepened investor scepticism around Oracle's aggressive AI infrastructure buildout," said Tony Sycamore, analyst at IG, adding that he has now moved to a more neutral stance on the Nasdaq 100.

"Worries over soaring capex, heavy debt, construction delays, OpenAI's massive cash burn, and mixed Q2 earnings have eroded confidence, positioning Oracle as the poster child of fading AI infrastructure hype."

INFLATION SURPRISE FIRMS CASE FOR BOE RATE CUT

On the monetary policy front in the U.S., Federal Reserve Governor Christopher Waller, who is expected to be interviewed by Trump as a candidate for the next Fed chair, said the central bank has room to cut interest rates amid signs of job market weakness.

Investors are also watching out for a U.S. inflation report for November later in the day that will not include the month-on-month measure since a record government shutdown prevented data collection for October.

Forecasts are centred on an annual rise of 3% in core inflation last month.

In the forex markets, sterling held at $1.3374, having slumped to as far as $1.3313 overnight after data showed British inflation fell much more than forecast to 3.2% in November, its lowest since March. That all but cemented the case for a rate cut from the BOE later in the day, which is about 98% priced in.

The euro was steady at $1.1742, not far from a three-month top of $1.18, ahead of the European Central Bank policy decision where expectations are for no change.

Treasuries were largely steady. Two-year Treasury yields fell 1 basis point to 3.4725%, having budged little overnight, while the 10-year yield was flat at 4.1431%.

Oil prices gained for a second day after Trump's announcement of the Venezuela blockade with most exports from the country remaining on hold. U.S. crude rose 1.7% to $56.91 per barrel, while Brent crude futures were up 1.5% at $60.62 a barrel.

Spot gold prices slipped 0.3% to $4,330 per ounce, while silver also eased 0.2% to $66.17 per ounce but remained just a touch below a record high of $66.88 hit on Wednesday.

Source: Reuters

Internal Republican Tensions Disrupt Leadership Strategy

Subsidy Extension Delayed Until January Amid Expiration Risks

Political Implications and Strategic Calculations

Source: Bloomberg

Honda Motor Co. will halt production at plants in Japan and China in coming weeks, highlighting the lingering fallout of the global chip shortage.

The Japanese carmaker will suspend output in Japan on Jan. 5 and Jan. 6, a spokesperson said Thursday, without specifying which plants will be affected. All three of the facilities in its joint venture in China, Guangqi Honda Automobile Co., will be offline from Dec. 29 to Jan. 2.

The company had said it anticipated getting disrupted production back on track from late November, but the looming suspension of some of its factories indicates ongoing snarls in the supply chain. Honda shares declined 1.5% in Tokyo. Japanese media outlets reported the news earlier.

Carmakers around the world have had their production plans thrown into disarray in recent months after China blocked Nexperia BV — owned by Chinese company Wingtech Technology Co. — from exporting products made at its local plants.

Honda has been hit hard, with the chip shortage prompting it to reduce its sales forecast to to 3.34 million units from 3.62 million. It had previously curbed or suspended output at some plants in North American due the issue.

Nexperia makes semiconductors used in vehicle control systems for functions such as activating windshield wipers and opening a window.

Source: Bloomberg Europe

Energy - Oil supply risks grow

Oil prices rallied yesterday on growing supply risks facing the market. This strength has continued in early-morning trading today.

There are concerns over Venezuelan oil exports after President Trump announced that the US will impose a blockade on sanctioned oil tankers entering and leaving the country. This puts at risk around 600k b/d of oil exports, the majority of which goes to China. However, flows to the US, currently around 160k b/d, will likely continue. This oil is from Chevron, which previously received a licence from the US government to continue operating in Venezuela. The key questions are, first, how effective this blockade will be, and second, how long it will last. This will be important in determining the impact on the oil market.

Reports yesterday that the US government is preparing even stricter sanctions on Russia's energy sector pose a larger supply risk to the market -- in case President Putin fails to agree to a peace deal with Ukraine. Given the surplus outlook and Brent trading around $60/bbl, Trump has room to be more aggressive with sanctions.

Weekly inventory data from the Energy Information Administration (EIA) shows that US crude oil inventories fell by 1.27m barrels over the last week. This was much less than the 9.3m barrel decline the API reported the previous day. The draw was primarily driven by stronger exports over the week, with crude oil exports increasing 655k b/d WoW to 4.66m b/d. Meanwhile, gasoline and distillate fuel oil inventories increased by 4.81m barrels and 1.71m barrels, respectively. These builds in refined-product stocks were supported by refinery runs reaching their highest level since early September.

European gas prices rallied yesterday, with TTF settling 2.22% higher on the day amid forecasts for colder than usual weather towards the end of the month. Strength in the oil market likely provided some support as well. However, the latest positioning data continues to indicate that speculators are increasingly bearish on the European gas market. Investment funds sold a further 7.9TWh in TTF over the last reporting week, leaving them with a net short of 92.8TWh. This is the largest net short since early 2020. The gross short stands at a record 546TWh, up 18.4TWh over the week. It continues to pose a risk to the market should we see any supply disruptions or demand surges.

Metals – Gold nears all-time high; silver extends record run

Gold is trading just shy of its all-time high above $4,381/oz, a level last seen in October, as tensions rise in Venezuela following Trump's blockade order for all sanctioned tankers. The US president is also pressuring Nicolas Maduro amid a regional military buildup.

The market is awaiting US inflation data on Thursday, which could signal further monetary easing. This follows the Federal Reserve's third consecutive rate cut earlier this month. For now, traders assign a probability of less than 25% of a reduction in January.

Gold has surged over 60% year-to-date, its strongest annual performance since 1979. The rally is underpinned by robust central bank buying, macro uncertainty, and a structural shift in strategic asset allocation. Geopolitical uncertainty has been a key driver of gold's exceptional rally this year.

We remain positive on our gold outlook, with macro tailwinds and fundamentals pointing to further upside next year. We expect gold prices to reach new record highs in 2026. The downside should be limited, as any weakness will likely attract renewed interest from both retail and institutional buyers.

Silver, meanwhile, hit another record high above $66.50/oz. Prices have now more than doubled year-to-date. Investor appetite remains strong, as silver-backed ETFs continue to attract inflows. The outlook remains constructive into 2026, supported by robust industrial demand from solar PV installations and battery technologies, alongside sustained investment flows.

Agriculture – Soybeans decline on better supply prospects

CBOT soybean prices yesterday hovered near their lowest level since October, pressured by strong global supply prospects and a lack of fresh Chinese buying. In a recent report, CONAB estimates soybean production in Brazil to reach 177.1mt in 2025/26, up 3.3% from last season. Weather remains a key factor, but crop stress to date has been minimal. China has started selling soybeans from state reserves to clear storage ahead of incoming US shipments. It purchased an additional 198kt of US soybeans, according to recent USDA data, bringing total purchases since October to around 3.7mt. China has increased purchases but must continue to buy steadily to meet commitments under a late-October agreement.

Data from Ukraine's Ministry of Agriculture indicate that grain and legume exports in 2025/26 declined to approximately 13.8mt tons as of 17 December, representing a year-on-year decline of 29%. Total corn shipments stood at 4.8mt (-40% YoY), while wheat exports fell 17% YoY to 7.6mt.

Source: ING

The world's best-performing stock is turning into a cautionary tale for investors chasing outsized returns from the artificial-intelligence boom.

Little-known until recently even within its home market of India, RRP Semiconductor became a social media obsession as its shares surged more than 55,000 per cent in the 20 months through Dec 17 – by far the biggest gain worldwide among companies with a market value above US$1 billion (S$1.3 billion).

That's despite posting negative revenue in its latest financial results, reporting just two full-time employees in its latest annual report, and boasting only a tenuous link to the semiconductor spending boom after shifting away from real estate in early 2024.

A mix of online hype, a tiny free float and India's swelling base of retail investors drove 149 straight limit-up sessions, even as exchange officials and the company itself cautioned investors.

The rally is now showing signs of strain – and regulators are taking a closer look. The Securities and Exchange Board of India (SEBI) has begun examining the surge in RRP Semiconductor's shares for potential wrongdoing, according to a person familiar with the matter. The US$1.7 billion stock, recently restricted by its exchange to trading just once a week, has fallen by 6 per cent from its Nov 7 peak.

While RRP Semiconductor's trajectory is unlikely to have much bearing on the broader AI rally that has added trillions of dollars in value to global heavyweights such as Nvidia, it highlights how extreme gains have become in pockets of the market – particularly in India, where an absence of listed chipmakers has left retail investors eager for any proxy exposure to the global boom. For some observers, the case also underscores the challenge for regulators seeking to protect retail investors from speculative excess.

Exchanges and chipmakers in Asia have started to warn investors about the risks of chasing hot AI trades. In Shanghai, Moore Threads Technology – a newly listed AI-chip start-up – saw shares slump 13 per cent on Dec 12 after flagging trading risk, even though the stock remains more than 500 per cent up since its market debut earlier this month. In South Korea, SK Hynix fell after the country's main exchange raised its risk alert on Dec. 11, after the shares more than tripled in 2025.

RRP Semiconductor's transformation began in early 2024, when RRP Group founder Rajendra Chodankar - whose background includes offering niche products like thermal imaging systems and weapon-drone cameras – struck a deal to take over G D Trading and Agencies by repaying an 80 million-rupee loan owed to its founders for equity.

On April 23, the board approved selling him and several others shares at 12 rupees each, 40 per cent below market price. The move gave Mr Chodankar 74.5 per cent ownership and reduced the founders' stake to under 2 per cent. The company also agreed to rename itself RRP Semiconductor.

Two months earlier, Mr Chodankar had incorporated RRP Electronics to build an outsourced semiconductor assembly and testing facility in Maharashtra – a link that may have helped fuel the narrative around the listed company and his private venture.

At a September 2024 event for RRP Electronics' new unit in Navi Mumbai, Mr Chodankar told a media briefing: "India is going to be a superhuman, it's established beyond doubt." Maharashtra Chief Minister Devendra Fadnavis and cricket legend Sachin Tendulkar were also present, according to YouTube videos posted by RRP.

RRP Semiconductor lists RRP Electronics as a related party because both are owned by Mr Chodankar, though it does not hold any direct ownership stake, according to exchange filings.

Still, some investors began viewing RRP Semiconductor as a play on the chip boom. That enthusiasm masked how little of its stock actually trades: about 98 per cent of shares are held by Mr Chodankar and a small circle of associates.

In April this year, the exchange withdrew approval for the company's share sale, a decision RRP Semiconductor has challenged in an appeals court with the outcome still pending. In October, it cautioned investors a year after placing the stock under its strictest surveillance.

The rejection followed a September 2024 reminder from SEBI that the company was barred from accessing the securities market because it belonged to the founder group of Shree Vindhya Paper Mills, a firm delisted in 2017 for non-compliance, triggering a 10-year market ban.

A person familiar with the matter at the BSE said the exchange suffered an "internal lapse" in processing the offering and may seek SEBI's guidance on extending the lock-in on the shares until the appeal is resolved.

A spokesperson for BSE said in RRP's original application, the company stated the firm, its founders and directors were not barred – directly or indirectly – from accessing the market, and that the exchange's approval was based on this disclosure.

As the stock took off from 20 rupees in April 2024, the company's biggest shareholder, Mr Chodankar, resigned from the board, and the chief financial officer quit before returning as company secretary. RRP Semiconductor filed a police complaint against a social media influencer over alleged rumour-mongering about its supposed links to cricketer Tendulkar and to state-allotted land for chipmaking.

In a Nov 3 exchange filing, the company said it "has yet to start any sort of semiconductor manufacturing activities," has made no applications under government programmes, and denied any celebrity association.

Financials offered little comfort. RRP Semiconductor reported negative revenue of 68.2 million rupees and a net loss of 71.5 million rupees in the quarter ended September.

The negative revenue is a result of the company reversing sales booked in the three months ended December 2024 from a 4.4-billion-rupee order won in November from Telecrown Infratech. The order was later cancelled over "contractual disagreements," the company said, adding that it also clawed back 80 million rupees of revenue in the March quarter.

The weak financials come at a delicate time for the stock. With the hype around AI fading and regulatory scrutiny tightening, the downside now sits with investors who piled in – and with Mr Chodankar, who controls nearly the entire float.

Source: Straitstimes