Asian markets saw a downturn on Monday, following a weak performance on Wall Street. Investors are preparing for a busy week ahead, with major corporate earnings reports and central bank decisions expected to influence market movements. Tokyo's Nikkei 225 dropped 0.1% to 62,602.86, while Seoul's Kospi fell 1.1% to 5,494.29. Hong Kong's Hang Seng bucked the trend with a slight gain of 0.2% to 23,137.93, and Shanghai's Composite lost 0.4% to 3,673.83. Australia's S&P/ASX 200 declined 0.2% to 8,782.30.
Oil prices also retreated after reaching their highest levels in over four years last week. Brent crude fell 1.3% to $110.23 a barrel, and U.S. benchmark crude sank 1.7% to $101.52 a barrel. On Friday, Brent crude had surged 3.1% to $116.72, its highest since June 2022. The U.S. war with Iran has contributed to supply disruptions, driving up energy prices and inflation.
Several AI-related companies showed resilience amid the broader market decline. Micron Technology rose 2.5%, Intel gained 1.7%, Microsoft added 0.7%, and Advanced Micro Devices closed 1.7% higher. However, investors remain cautious about the high valuations of these companies, particularly as rising interest rates make borrowing for AI investments more expensive. Analysts are closely watching earnings reports from major tech firms like Alphabet, Microsoft, and Amazon this week to assess the viability of these investments.
Treasury yields in the U.S. edged higher after sharp drops on Thursday. Global yields have been rising due to concerns over government debt and persistent inflation, which remains above 3% in the U.S. The Federal Reserve raised its benchmark interest rate at its last meeting to combat inflation and is expected to hold rates steady this week, though another hike in December is likely. The personal consumption expenditures index, or PCE, is expected to show inflation rose at a 3.7% rate in September, well above the Fed's 2% target.