Asian markets mixed as oil prices fall more than 1%

Investors brace for big tech earnings and central bank decisions

Stocks in Asia were mixed on Monday, while oil prices fell after rising last week to their highest level in more than four years. U.S. futures edged higher.

Tokyo’s Nikkei 225 index fell 0.8% to 62,189.65 as shares of chipmakers and other technology companies came under selling pressure again. Advantest , which makes testing equipment for computer chips, lost 3.9%, while Tokyo Electron , a supplier of chip and flat-panel manufacturing equipment, shed 3.7%. The Bank of Japan will announce its decision on the key interest rate later this week.

In Seoul, the Kospi dropped 1.5% to 5,469.47. Shares of memory chipmaker Samsung Electronics fell 1.1%.

In Hong Kong, the Hang Seng index rose 0.5% to 23,206.82. The Shanghai Composite gained 0.2% to close at 3,697.52 after early losses. Australia’s S&P/ASX 200 also pared its losses and finished 0.2% higher at 8,809.90.

Brent crude, the international benchmark, fell 1.4% to $110.12 per barrel. U.S. benchmark WTI crude dropped 1.8% to $101.37 per barrel.

On Friday, Brent had jumped 3.1% to $116.72, the highest since June 2022. The price has not fallen below $97 since early October.

The S&P 500 slipped 0.5% on Friday, marking a second consecutive weekly loss. The Dow Jones Industrial Average fell 1.2%, and the Nasdaq composite lost 0.2%.

Several AI-related companies helped soften the impact of the broader market decline: Micron Technology rose 2.5%, Intel 1.7%, Microsoft 0.7% and Advanced Micro Devices 1.7%.

Stocks that benefited from AI enthusiasm have faced waves of selling as investors worry whether their high valuations are justified. Many of these companies have borrowed to fund investments in AI technology, and high interest rates make those loans more expensive.

Industrial companies also took heavy losses: Caterpillar fell 2.4%. American Express shares dropped 3.7%. Although the company beat analysts’ forecasts last quarter, it announced large-scale layoffs for the first time in nearly a decade.

Several prominent AI-linked companies, including Alphabet, Microsoft and Amazon, are reporting financial results this week. Analysts say this could shake the markets.

Steven Innes of SPI Asset Management noted that this week is more about evidence than broad conviction: “Big Tech must show that spending deserves the market’s confidence.” According to him, investors want to know whether the billions of dollars spent on computing infrastructure are a lasting earnings engine or just a shinier version of the same old capital furnace.

U.S. Treasury yields rose on Thursday after sharp declines. Yields are climbing globally, partly due to concerns about excessive government borrowing.

Inflation also remains a risk: in the U.S. it is stubbornly above 3%. This prompted the Federal Reserve to raise its benchmark interest rate at its last meeting. Wall Street expects the Fed to hold rates steady at this week’s meeting, but a further hike in December is seen as likely.

This week will also bring the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index. September inflation is expected to have come in at 3.7%, well above the Fed’s 2% target.

The U.S. war with Iran has sharply reduced global oil supplies, pushed up energy prices and driven up the cost of everything from gasoline to food and clothing.

On Monday morning, the dollar slipped to 156.94 yen from 156.99 yen. The euro fell to $1.1216 from $1.1223.