Asian Tech Stocks Slide on AI Jitters as Canada Hike Bets Climb
Tuesday, 20 October 2026 — Technology shares came under renewed pressure in Asia as the AI trade stayed fragile ahead of this week's earnings tests, and the dollar weakened.
In brief
South Korea's Kospi led a renewed selloff in Asian technology shares as foreign investors cut exposure and a data-centre IPO plunged on its debut, with chip stocks the biggest drags.
Hedge funds cut technology positions last week at the fastest pace in at least a decade, and Netflix opens the AI earnings test after the close today, with Tesla, Meta and IBM tomorrow.
Bank of Canada surveys showed inflation expectations rising, and three Canadian banks switched to calling a rate rise next week as swap traders priced a hike as the base case.
Japan's 20-year bond auction drew the strongest demand on record, pulling super-long yields lower, as Finance Minister Satsuki Katayama pledged fiscal prudence on defence funding.
China held its loan prime rates for a 17th month, and analysts say the PBOC's planned shift to an overnight policy rate would amount to an effective easing.
Brent held near a five-month high as traders weighed Hormuz attack risks against Gulf flows, and crude stocks in the US Strategic Petroleum Reserve fell to their lowest since the early 1980s.
French protests eased after curfews and tougher security measures, but French bonds and stocks led Europe lower, and unions have called a strike for early November.
Today's Macro Roadmap: Germany's ZEW survey is out at 11:00 CET, ECB Governing Council member Olli Rehn speaks at 11:05 CET, US housing starts and building permits are out at 14:30 CET, pending home sales follow at 16:00 CET, BoE policymaker Megan Greene speaks at 19:00 CET, and Netflix reports after the US close.
The full briefing
Technology shares came under renewed pressure in Asia as the AI trade stayed fragile ahead of this week's earnings tests, and the dollar weakened (BBG). South Korea's Kospi fell 4.2%, with SK Hynix heading for its lowest close since April, and the MSCI Asia Pacific Index fell 1.2%, diverging from yesterday's tech-led gains on Wall Street (BBG). Nasdaq 100 futures fell 0.4% to 29,593 this morning, and S&P 500 futures were little changed at 7,730. Yesterday, S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 1.1% as the Philadelphia Semiconductor Index climbed 1.6% to snap an eight-day losing streak, its longest since 2008, while about 65% of S&P 500 stocks declined (BBG). Hedge funds cut their technology positions in the five sessions to 15 October by the largest proportion since 2016, according to Goldman Sachs's prime-desk data, and their net leverage fell to a one-year low of 48.6%, although net allocation to the sector remains in the 90th percentile over the past five years (BBG). Netflix reports after the close today, and Tesla, Meta and IBM report tomorrow (BBG).
Stocks
In stocks, Nikkei 225 futures fell 1.4% to 64,080, CSI 300 futures fell 1.4% to 4,090, Hang Seng futures fell 1.1% to 23,901, and MSCI emerging-markets futures fell 1.0% to 1,603. Chipmakers led the Korean selloff as foreign investors sold a net $480 million of Kospi shares in the first two hours, the index sank as much as 4.8% with all but one sector lower, and it is now down nearly 40% from its June record (BBG). Data-centre firm Elice fell as much as 33% on its Kosdaq debut after an IPO that raised 201 billion won at the top of its range, which would be the worst debut for a Korean IPO raising at least $100 million if the drop holds, and Firmus Grid pulled its Sydney listing this month (BBG). Asian AI infrastructure stocks fell: SK Hynix fell 3.5% and Samsung Electronics fell 0.7% early in the session, Kioxia fell 2.4%, TSMC fell 0.8%, and Hong Kong's Hang Seng Index fell 0.8% after reopening from Monday's holiday (WSJ). A US bank's positioning analyst said bearish momentum is building in Asian equities, with new short accumulation in the Kospi and the Nikkei, and that there is still no sign of an equilibrium, while a Japanese broker argued that investors are underestimating AI profitability across the supply chain (WSJ). SoftBank Group's five-year credit-default swaps reached 432 basis points, the highest since November 2022 and more than 130 basis points above Nissan's, as debt-funded AI investment and a potential acquisition of Allied Universal raised funding concerns, and its shares are down about 50% from a June high (BBG). Euro Stoxx 50 futures fell 0.7% to 6,112, DAX futures fell 0.5% to 25,302, and FTSE futures fell 0.5% to 10,749 after French bonds and stocks led Europe lower yesterday (BBG). VIX futures rose 0.07 points to 18.55.
The Bank of Canada's business and consumer surveys showed inflation expectations rising, with consumers' five-year expectations at 3.91%, the highest since the second quarter of 2022, and roughly half of firms planning to pass higher oil and tariff costs on to customers (BBG). Bank of Montreal, Royal Bank of Canada and Desjardins switched their calls to a rate rise to 2.5% at the 28 October meeting, and Scotiabank firmed up its hike call, after Statistics Canada reported inflation at 3.1% y/y, below expectations, and the odds of a hike in overnight swaps rose from about 30% a week ago (BBG). Governor Tiff Macklem said on Saturday that no resolution is in sight for the Middle East conflict, which is also boosting Canada's exports, incomes and government revenues (BBG).
New Zealand
In New Zealand, RBNZ Chief Economist Paul Conway told Bloomberg that the direction for interest rates is most likely up but that the October decision remains wide open, and local economists expect inflation to accelerate to as much as 4.7% in the fourth quarter against the RBNZ's 3.9% projection as a weaker currency and higher fuel prices feed through (BBG).
China
In China, the People's Bank of China held the one-year loan prime rate at 3.0% and the five-year rate at 3.5% for a 17th month, as expected (Investing.com). Its plan to study shifting the policy benchmark from the seven-day reverse-repo rate to the overnight rate would effectively lower borrowing costs and support bonds, Chinese brokerage analysts say, with one house putting the new anchor at 1.25% against 1.40% today (BBG). Zuo Gang of the National Development and Reform Commission said the economy has withstood pressure but the foundation and momentum of the recovery remain relatively weak, with strong supply against weak domestic demand, and the NDRC is drafting a plan to expand domestic demand over 2026 to 2030 (USNews).
Japan
In Japan, Finance Minister Satsuki Katayama said the government will take fiscal sustainability into account in funding higher defence spending, after Kyodo reported that an additional corporate tax increase is a possible funding source for a five-year plan that could total ¥70 trillion to ¥80 trillion (BBG). The Bank of Japan is preparing to shift its focus to keeping inflation stable around 2% as the target comes within reach, while the government remains wary of declaring the goal met (Nikkei).
The Fed
Regarding the Fed, officials increasingly see the AI investment boom as an inflation driver, which means further tightening would have to cool the rest of the economy while AI-linked firms stay largely insulated (Reuters). Chair Kevin Warsh has called AI investment a shock to prices and demand (Reuters). Cleveland Fed President Beth Hammack said higher rates cool the economy at the margins, and Richmond Fed President Tom Barkin and St. Louis Fed President Alberto Musalem argue inflation can fall without serious damage to growth, with AI investment expected to reach about $1 trillion next year, roughly 3% of GDP (Reuters).
Currently, STIR traders price an 83% probability of a Bank of Canada rate rise at the 28 October meeting and 36 basis points of tightening by December, and an 81% probability of an RBNZ rate rise at its meeting the same day. For the Fed, they price a 17% probability of a rate rise next week and 27 basis points cumulatively by December; for the ECB a 9% probability of a rate rise next week and 23 basis points by December; for the BoJ a 5% probability of a rate rise on 30 October and 21 basis points by December; and for the BoE an 87% probability of a rate rise in November.
Currencies
In currencies, the dollar declined against all of its Group-of-10 peers (BBG), and the dollar index fell 0.2% to 101.78. The euro rose 0.2% against the dollar to 1.1231, and an asset manager's macro strategist wrote that euro bulls are scarce with the war in Iran dragging on and French politics unresolved (BBG). Sterling rose 0.2% to 1.3332, and the yen firmed 0.2% to 158.14 per dollar. The Canadian dollar firmed 0.2% to 1.4078 per dollar, the New Zealand dollar rose 0.3% to 0.5679, and the Australian dollar was little changed at 0.6984. The won firmed 0.3% to 1,328.1 per dollar, and the offshore yuan was little changed at 6.6788. Asian currencies consolidated as markets were caught between the US tech rebound and geopolitical headwinds, with the dollar little changed at 1.2793 Singapore dollars and Taiwan's September export orders watched as a gauge of the AI cycle (WSJ). The Mexican peso was little changed at 18.4134 per dollar after President Donald Trump said Mexico and the US are very close to a trade deal (Reuters).
Bonds
In bonds, the ten-year Treasury yield slipped 2.1 basis points to 5.12% after rising 6.7 basis points yesterday, when reduced haven demand pushed yields higher (BBG). The two-year yield fell 1.5 basis points to 4.76%, and the thirty-year fell 1.1 basis points to 5.46%. Japan's ten-year yield slipped 0.5 basis points to 2.90%, and the two-year slipped 0.4 basis points to 1.90% after the 20-year auction drew a record bid-to-cover ratio of 5.84 against 4.01 at the previous sale, which pushed the 20-year yield down as much as 6 basis points to 3.71% and the 30-year down as much as 5 basis points (BBG). Australia's ten-year yield rose 2.4 basis points to 5.25%, and China's ten-year yield fell 3.0 basis points to 1.62%. French bonds declined yesterday after the weekend's unrest (BBG), and a ratings-agency insurance analyst estimated the cost of the riots at below €1 billion to €1.2 billion, while unions have called a strike for 5 November (BBG). Treasuries are losing their lustre as a portfolio hedge as rising supply, persistent inflation and higher neutral rates weaken the case, the head of a US bank's Australian business said, with the ten-year yield having touched its highest since 2007 in September (BBG). US corporate income tax revenue fell roughly 15% to $381 billion in the fiscal year to 1 October, a drop of about $70 billion, after last year's tax law let companies write off AI investment faster (Nytimes).
Commodities
In commodities, Brent rose 0.4% to $109.97 a barrel, near a five-month high, as traders weighed the risk of further Iranian attacks in the Strait of Hormuz against robust crude flows from the Persian Gulf (BBG), and front-month WTI was 0.2% higher at $103.91 (WSJ). Crude futures settled lower yesterday after Trump waived some new sanctions against Russia, with December Brent down 0.3% at $109.55 and the expiring November WTI contract up 2.2% at $103.66, and Kpler data show flows through the Strait of Hormuz averaging 10.17 million barrels a day over seven days, 41% below the pre-war baseline (WSJ). Energy Secretary Chris Wright said oil flows have recovered to about 80% of pre-conflict levels (WSJ). Iran has been giving the Houthis intelligence and targeting assistance for attacks on Saudi Arabia (WSJ). Crude stocks in the US Strategic Petroleum Reserve have fallen to their lowest since 1982 (Reuters). Gold fell 0.4% to $4,124 an ounce as elevated bond yields weighed after the French bond selloff (WSJ). Copper fell 0.2%, and BHP reported a 19% y/y drop in quarterly copper output to 400,700 tons on grade declines and storms in Chile while keeping its guidance, with realised prices up 53% to $7.01 a pound (BBG). Corn fell for a sixth day, the longest losing streak since March 2025, as export inspections dropped almost 50% week on week with 44% of the US crop harvested (BBG). Bitcoin fell 0.1% to $81,811, and Ether was little changed at $2,400.
Geopolitics
In geopolitics, US special envoy Steve Witkoff is set to travel to Norway this week for the next round of talks on ending the war in Ukraine, with President Volodymyr Zelenskiy expected to attend, and Witkoff is also due to meet President Vladimir Putin in Russia, people familiar with the plans said, as Kyiv alleges that Washington slowed its Starshield satellite service and delayed Patriot deliveries (Reuters). German Chancellor Friedrich Merz told Bloomberg that Russia is seeking to destabilise Europe's entire political order, that Germans underestimate the threat, and that European allies are funding Ukraine without US help (BBG). In France, protests largely died down after the government imposed curfews and tougher security measures following weekend demonstrations in which 2,397 people were arrested on Saturday, and a poll taken before the riots had Marine Le Pen leading the presidential first round with at least 31% (BBG). Canada awaited results from Alberta's referendum on whether to start a legal process that could lead to a vote on separation, after more than 1.35 million Albertans, or 43% of eligible voters, cast advance ballots and more than 100 polling stations extended voting hours (AP). Trump's approval rating fell to 31%, the lowest of either term, in a Reuters/Ipsos poll, and Democrats lead the generic congressional ballot by 47% to 35% ahead of the 3 November midterms (Reuters). In the UK, Chancellor John Healey has ruled out a capital gains tax increase in the 28 October budget, the Times reported (Reuters).
Corporate news
In corporate news, Apple confirmed a product launch event on 28 October at which it plans to debut its first touch-screen MacBook, and Nscale was said to be in talks on a $45 billion computing deal with Anthropic (BBG). Australia's government is set to sue Facebook, TikTok and other platforms over alleged breaches of its under-16 social media ban after doubling the maximum penalty to A$109.2 million (BBG).
Research trade ideas
Goldman Sachs upgraded CoreWeave to buy from neutral, arguing that the debt worries are overblown after the shares sank 25% last week, and cut its price target to $106 from $139, still more than 40% above Friday's close, as it estimates the blended cost of debt could rise 100 to 200 basis points and no more (BBG).
Data and the day ahead
Data and the day ahead: In the UK labour market overview, unemployment fell to 4.7% in the three months to August from 4.9%, below the expected 4.9%, and total pay growth slowed to 3.7% y/y from 3.9%, below the expected 3.8%, while regular pay growth rose to 3.7% from an upwardly revised 3.6% (3.5%) (ONS). Tokyo condominium supply fell 40.1% y/y in September after a 12.4% drop in August. Still to come: Germany's ZEW survey is out at 11:00 CET, with consensus for expectations at 30 from 34.7 and for the current-situation index at -44.5 from -47.1, after a preview flagged the first decline in six months on energy costs (LS), and ECB Governing Council member Olli Rehn speaks in Helsinki at 11:05 CET. US housing starts are out at 14:30 CET, with consensus at 1305k from 1275k, alongside building permits, with consensus at 1385k from 1403k, and pending home sales follow at 16:00 CET, with consensus at -0.5% m/m from 0.3%. Bank of England Monetary Policy Committee member Megan Greene speaks at the LSE at 19:00 CET, and Netflix reports after the US close (BBG). Later in the week, Tesla, Meta and IBM report tomorrow (BBG), and New Zealand's third-quarter inflation report is due on Thursday, with consensus at 3.8% y/y from 4.1% (BBG). Next week, the Fed meets on 27-28 October (Reuters), the Bank of Canada and the RBNZ decide on 28 October (BBG), the UK budget is on 28 October (Reuters), and the Bank of Japan also meets (BBG).
Time Stamp: 20 October 2026, 07:51 CET
Three threads to carry through the day:
The first is the AI trade. Yesterday's rebound in US chip stocks did not last: Korea sold off again, a data-centre IPO lost a third of its value on its debut, and SoftBank's credit spreads are at a four-year high. The positioning data show hedge funds have cut technology at the fastest pace in a decade but still hold books near five-year highs, so Netflix tonight and Tesla and Meta tomorrow might give us some clues where tech stocks are headed next.
The second is the bond market. Treasury yields remain elevated, and their role as a hedge is being questioned, while Japan's record 20-year auction suggests higher yields are starting to attract buyers. French politics keeps the European leg of the selloff-risk alive.
The third is Canada and New Zealand. Both central banks decide on 28 October, and the market now treats a rate rise at each as the base case after Canada's surveys showed inflation expectations climbing. The Canadian dollar and the kiwi have firmed into those meetings, and Thursday's New Zealand inflation report is the last major input for the RBNZ.
What's Priced
Basis points of change priced from today through each meeting; positive denotes hikes.
Fed: +4bp by 28 Oct, +27bp by 09 Dec
ECB: +2bp by 29 Oct, +23bp by 17 Dec
BoE: +22bp by 05 Nov, +35bp by 17 Dec
SNB: +6bp by 10 Dec, +22bp by 18 Mar
BoJ: +1bp by 30 Oct, +21bp by 18 Dec
RBA: +6bp by 03 Nov, +13bp by 08 Dec
RBNZ: +20bp by 28 Oct, +38bp by 09 Dec
BoC: +21bp by 28 Oct, +36bp by 09 Dec
Chart of the Day: Swiss trade surplus has narrowed considerably on a trend basis
Some news from GGMA: LiveSquawk's professional squawk now streams inside GGMA Squawk & Chat, alongside our own macro desk.
What's inside:
Live squawk: LiveSquawk plus our macro desk. Choose GGMA, LiveSquawk or a mixed stream.
Members' forum: talk the moves through as they happen.
Voice & video calls: one-on-one or in a group, straight from the chat.
Try it free for 30 days, no card required.
Yesterday's Briefing: Nasdaq Futures Rebound as Oil Slips and China Beats
Newsletter: Feel free to subscribe to our free newsletter here.
Tags: Kospi selloff, Elice IPO debut, SoftBank credit swaps, hedge funds tech, Bank of Canada hike, RBNZ rate rise, Japan 20-year auction, Netflix earnings