(Oct 16) : Asian stocks were set to rebound Friday as concerns over stretched artificial-intelligence valuations eased, putting the region on course for its first gain this week after a four-day slide.

Equity-index futures for Japan, South Korea and Australia pointed to gains at the open, while US equity futures were little changed. The moves followed a volatile Wall Street session in which chipmakers pared steep losses after Nvidia Corp. Chief Executive Officer Jensen Huang defended the financial health of AI computing supplier CoreWeave Inc. The Philadelphia Semiconductor Index fell as much as 4.4% before trimming the drop.

US oil steadied after Brent crude swung between gains and losses as a fresh release from emergency reserves countered mounting supply risks from the Strait of Hormuz to the Black Sea.

This week’s equity selloff drove some investors toward the safety of bonds, pushing the benchmark 10-year Treasury yield lower to 5.07%. US government debt rallied across maturities Thursday, sending yields as much as 12 to 15 basis points down to their lowest levels in several weeks. The dollar weakened, while gold climbed as Treasury yields fell.

Elsewhere, Indonesia risks losing its coveted emerging market status after MSCI Inc. launched a consultation, citing lack of progress in addressing investor concerns around the Southeast Asian nation’s stock market.

Attention now turns to whether the rebound in equities can broaden after the selloff exposed growing unease over the heavy concentration of gains in AI-linked stocks. Signs of a rotation into other parts of the market may offer equities a firmer footing after months in which technology shares dominated returns.

“After a strong run in AI stocks the past few months, value shares got way too cheap while tech got quite expensive amid the artificial-intelligence frenzy,” said Brian Frank, president and portfolio manager at Frank Funds. “We’re still looking for companies that have good credit and trade at discounts in case growth or consumer spending ebbs on sticky inflation.”

There were already signs of a broader shift on Wall Street. An equal-weighted version of the S&P 500 climbed 1.4%, with health-care and consumer-staples shares leading gains.

At the same time, questions over the durability of the AI investment boom are spilling into credit markets as investors scrutinize the debt financing the infrastructure buildout. Concerns about CoreWeave’s viability have become a flashpoint, adding to speculation that spending has run ahead of companies’ ability to generate returns.

The Treasury rally briefly lost momentum on Thursday after US producer prices and retail sales rose more than expected in September. The data reinforced the inflation pressures that prompted the Federal Reserve to raise rates last month for the first time since 2023 and kept expectations for further tightening alive. Futures briefly put the odds of an October increase above 50%.

That puts Federal Reserve Chair Kevin Warsh’s remarks later Thursday New York time in sharper focus for clues on whether officials are moving toward another increase in October. Warsh is due to speak in Bangkok at a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva.

“On balance, we think Warsh will talk in a way that does not suggest an October hike,” said Krishna Guha at Evercore. “Warsh will be mindful of the global wobble in tech stocks and signs financing conditions are tightening for more exposed AI names, on top of the prior move up in longer-term yields.”

uploaded by Isabelle Francis