Asian Shares Set for Weaker Open, Crude Oil Falls: Markets Wrap

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(Bloomberg) — Asia’s benchmark share index is set to slip from a record high after declines on Wall Street, where investors rotated out of richly valued technology stocks.

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Equity-index futures for Japan, Hong Kong and mainland China all declined after the tech-heavy Nasdaq 100 Index dropped 1.1% on Wednesday. The S&P 500 closed 0.5% lower due to losses in the tech megacaps, even as a majority of companies rose. 

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Oil fell after President Donald Trump said he had been assured Iran would stop killing protesters in a signal he could hold off on a threatened military response to the repression of demonstrations. West Texas Intermediate was down as much as 3% after settlement on Wednesday. Elsewhere, gains in Treasuries pushed the 30-year yield to the lowest level this year. Metals extended their recent rally, with gold, silver and copper rising to records.

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Asian shares have outpaced gains on Wall Street this year on relatively cheaper valuations and continued bets on the artificial-intelligence trade. In contrast, the first weeks of the year in the US have been marked by a rotation out of giant tech companies, whose all-weather earnings made them safe bets at times of economic uncertainty.

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“This is a demonstration of what occurs when rotation affects the stocks that dominate key indexes,” Steve Sosnick, chief strategist at Interactive Brokers, wrote in a note. 

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Meanwhile, the US Supreme Court didn’t rule on challenges to Trump’s tariffs Wednesday, leaving the world to wait until at least next week to learn the fate of his signature economic policy.

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Also on Wednesday, as earnings rolled in, Wells Fargo & Co. sank after missing profit estimates while concern about Bank of America Corp.’s expense outlook offset solid results. Citigroup Inc. slipped as top executives reined in analyst exuberance about the bank racing toward the finish line on key regulatory requirements and reducing its expenses.

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“The expectations for this earnings season are very high,” said Matt Maley at Miller Tabak. “If those expectations are not met in today’s stock market — which is priced for perfection — it’s going to create some headwinds.”

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While the S&P 500 fell amid a slide in all “Magnificent Seven” shares, more than 300 of its firms actually rose. Small caps continued to outperform, with the Russell 2000 beating the S&P 500 for a ninth straight session — matching the longest streak since 1990.

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Treasuries remained higher after a batch of economic data was seen as unable to justify a shift in expectations for monetary policy. Money markets continued to project the next Federal Reserve rate cut only in mid-2026.

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On the macro front, US retail sales rose in November by the most since July, fueled by a rebound in auto purchases and resilient holiday shopping. Wholesale inflation picked up slightly on a jump in energy costs, even as prices for services were unchanged.