Global bonds rally as tech stock rout spreads to Asia

Investors moved into government debt across Europe and Asia on Friday, Nov. 6. A rout in U.S. technology stocks spread to Tokyo and Seoul and pushed sovereign yields to multi-month lows. Germany's benchmark 10-year Bund yield fell to 3.21%, its lowest since August, Yahoo Finance UK reported. Japan's 10-year yield dropped to 2.627%, the lowest since June, in its steepest one-day fall since July, according to Investing.com.ca.investing.com+1

The bond rally followed a sharp drop on Wall Street. On Thursday, the Nasdaq Composite fell 5.52%, its deepest one-day decline in 19 months, which confirmed a correction from its Oct. 6 record. Reuters reported that chipmakers sank on fears of tougher AI regulation after Democrats won control of Congress. Reuters said investors "fled to the safety of bonds" as stocks slid further in Europe and Asia.charlotteobserver.com+1

Yields fall across curves

German bond buying went beyond the long end. The two-year Schatz yield fell to 2.935%, also its lowest since August, and the 10-year yield was on course for a fourth straight weekly decline, its longest such run since February, Yahoo Finance UK reported. In Japan, the two-year yield fell to 1.731%, its lowest since September, Investing.com reported. That reversed a move from just a day earlier, when hawkish Bank of Japan minutes had supported bets on a rate hike.uk.finance.yahoo.com+1

Japan's Nikkei 225 fell about 6.4%. South Korea's Kospi also slumped by more than 6%, and Korean government bonds gained as investors left a semiconductor-led stock sell-off, KED Global reported. According to Reuters, the dollar, the yen and the Swiss franc also drew safe-haven flows.kedglobal.com+1

Politics and oil

Tuesday's Democratic election wins included states where opposition to new data centers has grown. Those results raised concerns that tighter rules could slow the AI infrastructure buildout, Reuters reported. Nvidia ↗ 3.45% fell more than 9%, and the Philadelphia Semiconductor Index PHLX Semiconductor Index ↗ 3.74% dropped more than 12%. Falling crude prices also played a part. Lower oil eased worries about energy costs and cooled expectations of rapid Bank of Japan rate hikes, The Wall Street Journal News Corp ↗ 1.04% reported.wsj.com+1

Rate bets shift

The sell-off has changed how traders view central bank policy. Markets were less confident on Friday that the Federal Reserve and the European Central Bank would raise rates in December, as worries about growth replaced worries about inflation, Reuters reported. U.S. Treasury yields had also been falling. The 10-year yield ended Thursday at 4.84%, down from above 5.30% last month, AP reported.apnews.com+1

Stocks found some footing later on Friday, when tech shares rose in early New York trading, The Guardian reported. Susannah Streeter of Wealth Club summed up the market's concern. "The build-out of datacenters looks set to slow, which risks shredding the spending spree underpinning the boom," she said.aol.co.uk+1