Asian stocks declined on Tuesday as rising oil prices and higher bond yields renewed inflation concerns, with Japan and South Korea leading losses after several sessions of gains.
The pullback intensified after the U.S.-Iran ceasefire expired and expectations for a quick diplomatic resolution faded. Brent crude moved above $91 a barrel, while the U.S. 30-year Treasury yield reached its highest level since 2007, adding pressure on risk assets.
The MSCI AC Asia Pacific index declined about 0.8%, while Nasdaq 100 Futures fell 0.7% and S&P 500 Futures dropped 0.4%.
Japan and Korea Technology Stocks Decline
Japan’s Nikkei 225 fell 2.5%, while the broader TOPIX index declined 1.1%. South Korea’s KOSPI erased an early gain of more than 3% and finished 1.6% lower after returning from a public holiday.
The Nikkei ended a five-session winning streak as higher oil prices and rising bond yields weighed on technology stocks. Semiconductor and electronic-component companies were among the biggest decliners.
Kioxia Holdings dropped 7.6%, Murata Manufacturing declined 9.6% and TDK lost 3.7%. Sony also slipped 1.2%.
South Korean chip stocks were also under pressure, with Samsung Electronics falling 1.4% and LG Innotek declining 1.3%. SK Hynix moved against the broader trend, gaining 1.4%.
AI Investment Momentum Faces Macro Pressure
The market weakness came despite continued investment in artificial intelligence infrastructure. Nvidia agreed to support up to $105 billion of financing for a new OpenAI data center campus in Ohio, highlighting the scale of ongoing AI infrastructure spending.
However, rising yields, inflation concerns and geopolitical risks temporarily outweighed the broader AI investment theme.
DBS analysts said the overall equity-risk environment remains supported by strong corporate earnings, the AI boom and a less hawkish Federal Reserve. They warned that risks could increase if the AI rally weakens, geopolitical tensions intensify or the Fed is forced to tighten policy again.
China and Hong Kong Markets Decline
China’s Shanghai Shenzhen CSI 300 declined 0.8%, while the Shanghai Composite fell 0.39%. Hong Kong’s Hang Seng Index dropped 0.73%.
Technology stocks in China and Hong Kong also weakened. Foxconn Industrial Internet declined 3.1%, Luxshare Precision fell 2.3% and Semiconductor Manufacturing International Corp slipped 0.5%.
Among major Hong Kong-listed companies, JD.com dropped 2.7%, Meituan declined 3.4% and Tencent fell 1.8%.
Energy stocks gained as crude oil prices climbed. Japan’s Inpex rose 2.7% and Eneos gained 2.2%, while CNOOC increased about 2% in Hong Kong.
Oil Risks Return as Strait of Hormuz Concerns Grow
The rise in energy stocks followed renewed concerns over Middle East supply risks after the U.S.-Iran ceasefire expired. Iran has threatened a more offensive posture, while President Donald Trump has signaled a tougher approach in negotiations.
The developments have raised further questions over the reopening of the Strait of Hormuz, a key route for global energy shipments.
Australia’s S&P/ASX 200 edged 0.2% higher, while Singapore’s FTSE Straits Times Index declined 1.3%. India’s Nifty 50 fell 0.3%, while Indonesia’s IDX Composite gained 1.3%.
Australia’s Westpac-Melbourne Institute consumer sentiment index increased 6% to 88.9 in August, marking a second consecutive monthly improvement.
Markets are now focused on Wednesday’s Bank Indonesia decision, with expectations that the central bank will leave policy unchanged after keeping rates at 5.75% in July.
