Global markets are entering the new trading day with investors facing a difficult mix of geopolitical uncertainty, surging bond yields, and renewed pressure on high-growth technology shares. After months of AI-driven optimism pushing equities to record highs, markets are now confronting the reality of elevated inflation risks and the possibility of interest rates staying higher for longer.
Asian Markets Slide as Tech Stocks Lead Losses
Asian equities traded mostly lower during Tuesday’s session, with technology shares once again under heavy pressure. South Korea’s KOSPI dropped sharply as semiconductor giants came under renewed selling pressure, reflecting weakness seen overnight in US chipmakers.
The broader MSCI Asia Pacific Index declined as investors rotated away from risk assets and toward safer positions amid growing uncertainty surrounding the Middle East conflict and global interest rates.
Japanese equities also weakened despite stronger-than-expected GDP data. Although Japan’s economy expanded for a second consecutive quarter, investors largely ignored the positive economic figures and instead focused on rising global bond yields and energy-driven inflation risks.
Meanwhile, Hong Kong markets managed modest gains, while Chinese equities remained under pressure as investor sentiment across the region deteriorated.
Bond Yields Become the Market’s Main Concern
One of the biggest themes dominating financial markets is the relentless rise in government bond yields.
The yield on the US 30-year Treasury climbed above 5.1%, reaching its highest level since 2023, while Japan’s 30-year government bond yield surged to record highs not seen since the bond was first introduced in 1999.
Markets are increasingly worried that elevated oil prices and resilient economic data could force central banks, especially the Federal Reserve, to maintain restrictive monetary policy for longer than investors had previously expected.
Historically, rising Treasury yields have created significant headwinds for equities, particularly growth and technology stocks. Higher yields reduce the attractiveness of future earnings projections, which directly impacts richly valued AI and semiconductor companies that have led the recent rally.
This concern is becoming increasingly visible in valuations. The Nasdaq 100 is currently trading above its long-term average forward earnings multiple, leaving the sector vulnerable to corrections if financing conditions tighten further.