Asian markets were expected to decline on Monday following the end of Wall Street's nine-week winning streak, triggered by heavy selling in technology stocks. Futures indicated sharp drops in Japan and South Korea, while S&P 500 futures fell 0.2% in early Asian trading, according to livemint.com.
The Nasdaq Composite plunged 4.2% on Friday, with semiconductor stocks hit hardest after a strong U.S. jobs report increased expectations for Federal Reserve interest rate hikes. This development slowed the momentum of the AI-driven rally that had been boosting tech shares. Two-year U.S. Treasury yields rose by more than 11 basis points on Friday, while 10-year Treasury futures declined slightly in early Asian trade.
The sell-off reflects concerns that tighter monetary policy could dampen growth prospects for the technology sector, which has been a key driver of recent market gains. The correction follows a period of sustained optimism fueled by advances in artificial intelligence, but rising bond yields have raised borrowing costs and pressured valuations. This shift has implications for global markets, especially in Asia where tech stocks have been sensitive to U.S. monetary policy signals.
In addition to market pressures, geopolitical tensions escalated as Israeli strikes on Beirut pushed oil prices and the U.S. dollar higher, adding to market uncertainty. Investors will monitor upcoming economic data and central bank communications closely to gauge the trajectory of interest rates and their impact on equity markets.