MSCI’s Asia-Pacific equities benchmark slipped over 1%

Asian stocks dropped on Wednesday as a sell-off in semiconductor shares extended, while higher bond yields and rising oil prices weighed on sentiment.

MSCI’s Asia-Pacific equities benchmark slipped over 1%, with shares in South Korea plummeting nearly 6%. Technology shares were weaker with chip bellwethers Samsung Electronics Co and SK Hynix Inc both dropping around 7% on Wednesday after a closely watched US gauge of semiconductor stocks dipped 5%. Contracts for the Nasdaq 100 Index edged lower after the underlying gauge slipped 1.7%.

While Treasuries edged higher by the close of trading on Tuesday, 10-year yields remained near the highest levels since early 2025. Earlier in the session, the 30-year yield had climbed to levels last seen in 2007 amid a worldwide bond sell-off.

Elsewhere, Brent crude added 0.3% to $91.30 a barrel, with the US and Iran stuck in a deadlock over control of the Strait of Hormuz. Gold extended its losses, trading just below $4,340 an ounce.

With the outlook for the Middle East remaining uncertain and yields staying elevated, markets are likely to remain in risk-off mode today, said Kazunori Tatebe, the chief strategist of Daiwa Asset Management. Higher yields will increase borrowing costs for hyperscalers, raising questions about the outlook for capital spending and the potential impact on artificial intelligence (AI) infrastructure companies.

Investors retreated from growth stocks as longer-term bond yields hovered near multi-decade highs, driven by concerns over persistent inflation, heavy government spending and a flood of debt issuance. Geopolitical turmoil is adding to the pressure by raising the risk of energy-driven supply shocks that may keep inflation and borrowing costs elevated for longer.