Asian markets displayed a mixed response on Tuesday following a record close for the Nasdaq on Wall Street, driven by concerns over rising government borrowing costs. While Tokyo, Hong Kong, Sydney, Jakarta, and Wellington experienced gains, Seoul, Singapore, Taipei, and Manila saw slight declines. Shanghai was closed for a holiday.
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Despite Wall Street's positive momentum, attributed to surges in tech giants like Nvidia, SpaceX, and Meta, analysts noted that the gains were concentrated among a few companies. The Dow and S&P 500 also finished higher. In the background, persistent uncertainty regarding the Middle East crisis has kept energy costs elevated, further exacerbating inflation and increasing pressure on central banks to raise interest rates. This situation has pushed government bond yields to levels not seen in decades.
The demand for financing among major tech firms has intensified, with companies like Google, Amazon, and Microsoft borrowing roughly $500 billion in the past nine months. Goldman Sachs projects this borrowing could escalate to $1.2 trillion by 2027. Chris Della Fave, a senior vice president at fundraising advisory firm Post Oak Group, highlighted that AI now represents 25 percent of all corporate bond issuance, a significant increase from 4 percent two years ago.
In the oil market, prices stabilized after a nearly two percent drop on Monday, but concerns remain as Saudi Aramco's CEO Amin Nasser warned about dwindling global stockpiles amidst increased Middle East oil exports, which have surpassed pre-war levels despite ongoing regional tensions. According to Kpler, a maritime tracking firm, attacks on ships in the Strait of Hormuz have not deterred exports significantly. However, Nasser emphasized caution regarding reserve figures, indicating that less than 10 percent are readily available. Fiona Cincotta from FOREX.com noted that tensions in the Middle East continue to elevate, particularly around the coasts of Oman and Yemen.