Kospi falls 3.5% as Asian stocks slide and Brent rises to $112

Key Facts

Asian stocks fell on Thursday, October 22, as energy supply risks mounted and concerns resurfaced over the cost of financing the expansion of artificial intelligence. South Korea's Kospi fell 3.5%, according to the Associated Press, posting the largest decline among the three Asian indexes tracked by the agency. Hong Kong's Hang Seng lost 3%, while Japan's Nikkei fell 2.7%. The South Korean losses followed a 1.8% rebound in the Kospi on Monday, when it recouped part of a 14.5% loss in the previous week, according to the agency. Thursday's decline thus extended a stretch of volatility, after the sharp weekly drop was followed by a partial recovery that failed to hold in the latest session.

In energy markets, Brent crude rose about 3% to $112 a barrel, according to Reuters' morning update, as risks of a wider conflict and supply disruptions in the Middle East intensified. The crude price move was sharper than in Wednesday's session, which it ended at $108.82 a barrel, up just 3 cents, according to Reuters. In a development involving shipping in the Strait of Hormuz, the Associated Press cited Iranian television, quoting the Revolutionary Guards' navy, as saying 7 oil tankers caught fire and were damaged overnight. Iranian television said the tankers "caught fire and were damaged overnight," according to the agency, which attributed the account to the Iranian side. Oil also rose after official U.S. data showed crude inventories fell by 3.1 million barrels in the week ended October 16, according to Investing.com. The inventory draw was larger than expected, adding the decline in U.S. stockpiles to the backdrop of concerns over Middle Eastern supplies.

In technology, Meta's third-quarter revenue exceeded analysts' expectations, according to results released on Wednesday evening and reported by Reuters. But the company also announced a plan to issue non-voting shares. The plan renewed concerns over Meta's growing capital commitments, leaving financing needs for its expansion a source of concern despite revenue beating expectations. The Associated Press had reported concerns on Wednesday that data center construction could slow because of higher borrowing costs. The agency described the concern as the possibility that "data center construction could slow because of the sharp rise in the cost of borrowing money," a backdrop that heightened volatility in artificial intelligence stocks.

The decline in Asian stocks followed a U.S. session on Wednesday that favored technology shares, with the Nasdaq rising more than 1%, according to Reuters. In Thursday's trading, equity losses coincided with demand for U.S. Treasuries. The 10-year Treasury yield fell 10 basis points to 5.05%, according to Reuters' morning update. Market moves thus combined falling Asian stocks, rising oil prices and declining U.S. Treasury yields amid concerns over energy and technology financing. The Federal Reserve's next monetary policy meeting is scheduled for October 27 and 28, according to the Federal Open Market Committee's official calendar.