Asian Stocks Mixed on AI Doubts, Iran Ceasefire Risk

Asian equities opened a mixed session on Monday. Benchmarks in Tokyo and Seoul edged lower. Shanghai and Hong Kong posted modest gains. Two factors drove the split, traders said. The first was a fragile U.S.-Iran ceasefire that kept oil prices elevated and pushed the dollar to a one-year high. The second was profit-taking in AI-exposed tech stocks after a weekend analyst note questioned near-term returns on generative AI spending.

Brent crude held above $87 a barrel after Washington and Tehran paused hostilities. The ceasefire did not include a binding agreement on sanctions or exports. Traders said the lack of clarity kept supply risk in the market, lifting front-end breakeven rates. Two-year Treasury yields rose 3 basis points to 4.12%. The dollar index climbed above 107.80. Higher oil prices feed into inflation expectations and lower the probability of a near-term Federal Reserve rate cut, traders said.

The dollar's rise and higher yields weighed on emerging-market assets and commodities during the session, traders said. The stronger greenback also pressured currencies like the rupee and the Australian dollar.

On the tech side, the weekend note from a sell-side firm said the generative-AI buildout would take longer to produce returns relative to capital spent. The analysis pointed to rising application costs, servers and electricity for example. That prompted some rotation out of semiconductor names into defensive sectors. The selling was concentrated in the most extended names and did not break the broader index's 50-day moving average, traders said.

Japan's Nikkei 225 slipped 0.3%. The yen weakened past 152 per dollar. Export stocks benefited. Importers faced higher costs. South Korea's Kospi fell 0.6%, led by Samsung Electronics and SK Hynix. Both names have benefited from AI demand and dollar strength. China's CSI 300 added 0.4%. The People's Bank of China injected 150 billion yuan via its medium-term lending facility, easing interbank funding costs. Hong Kong's Hang Seng rose 0.3%, tracking mainland gains.

In currencies, the dollar's ascent kept the rupee near its record low of 83.70. The Reserve Bank of India intervened lightly at the open, traders said. The Australian dollar, a liquid proxy for risk appetite, slipped 0.2% after iron ore futures fell overnight on fresh Chinese steel-demand concerns. Oil markets showed the remaining tension in the ceasefire deal. The premium for front-month Brent over six-month contracts widened to $5.60. That signals the market sees near-term supply risk as unresolved, traders said. Sanctions on Iranian crude exports remain in place. Tehran currently ships about 1.5 million barrels a day, and any disruption would tighten the global balance.

Friday's U.S. payrolls report is the next scheduled data point that could shift the direction. The consensus call is for 190,000 new jobs. Goldman Sachs flagged a 40,000 boost from World Cup-related hiring that could distort the read. A number near 250,000 or higher would reinforce the dollar bid and extend the rate-repricing trade, several traders said.