AI Selloff Deepens & Oil Extends Rally - Asia Market Wrap

Global stocks remained under pressure Friday as investors continued rotating out of AI-related shares and into safer assets, while oil extended its gains. Following Thursday’s sharp selloff in chip stocks on Wall Street, MSCI's Asia Pacific Index fell 0.5%, putting it on course for its lowest close since late July. South Korea’s Kospi, a key barometer of the AI trade, declined 0.6% and headed for its weakest close since early April. Asian equities were headed for a fourth consecutive weekly decline, their longest losing streak since April, despite recovering from session lows. Sentiment stabilized as Nasdaq 100 futures erased earlier losses to trade little changed, while European shares were set for a flat open. The broader retreat reflected growing concerns over crowded AI positions, prompting investors to reduce exposure to tech and seek protection in government bonds. Treasuries held most of Thursday’s gains after staging their strongest rally in more than two years, with the benchmark 10-year yield falling 17 bps to 4.96%. The rally briefly pushed yields below 5% for the first time in a month, supported by accelerating Treasury futures buying as traders unwound bearish position