Key Points

• AI Trade Faces Seasonal Market Pressure: Tech shares fell sharply, with the Nasdaq down 2% this week, as stretched AI-driven valuations face pressure ahead of Fed Chair Powell’s Jackson Hole speech.
• India’s Outlook Hit by Tariffs and Weak Earnings: Analysts cut forward earnings by 1.2%, the steepest in Asia, as 50% U.S. tariffs weigh on growth despite Modi’s tax reforms aimed at cushioning the impact.
• Oil Climbs on U.S. Stockpile Drawdown: Brent rose to $67.20 and WTI to $63.11 after a 6 million-barrel draw in U.S. stockpiles, reinforcing supply tightness and strong demand amid possible Russia-Ukraine peace talks.
• Asia Stocks Rebound as Tech Stabilizes, Australia Leads: Asian markets advanced, led by Australia’s ASX 200 breaching 9,000, while Chinese equities hit multi-year highs on stimulus hopes and South Korea rebounded.

AI Trade Faces Seasonal Market Pressure

U.S. technology stocks retreated this week, with the S&P 500 tech sector down about 2.5% and the Nasdaq off 2%, as investors pared exposure to high-flying AI names ahead of Fed Chair Jerome Powell’s Jackson Hole speech. Nvidia shares slipped 5% and Palantir tumbled 16% after a year of outsized gains that drove valuations to their loftiest levels since 2000. Caution was reinforced by data showing limited corporate returns on AI investments and warnings of investor overexuberance.

With seasonal weakness in August and September and stretched valuations, investors are rotating into defensive sectors while awaiting Fed policy clarity.

India’s Outlook Hit by Tariffs and Weak Earnings

Indian equities are under pressure as analysts cut forward 12-month earnings estimates for large and mid-cap firms by 1.2% in the past two weeks, the sharpest downgrade in Asia, according to LSEG IBES data. The revisions follow weak quarterly results and rising concerns over U.S. tariffs, which could reach as high as 50% and shave up to 1 percentage point off GDP growth, particularly in labor-intensive sectors such as textiles.

While Prime Minister Modi’s proposed tax cuts may support domestic consumption, valuations remain elevated, and Bank of America’s latest survey shows India has slipped from Asia’s most-favored to least-preferred equity market among fund managers.

Oil Climbs on U.S. Stockpile Drawdown

Crude prices extended gains in Asian trading after U.S. government data showed a far sharper-than-expected drawdown in inventories, signaling tightening supply and firm demand. Brent futures rose 0.5% to $67.20 per barrel and WTI gained 0.6% to $63.11, building on Wednesday’s near 2% rally. The EIA reported crude stockpiles fell by 6 million barrels versus expectations of a 1.8 million-barrel decline, while gasoline inventories also dropped amid strong summer driving demand.

Refinery utilization climbed to 96.6%, underscoring robust consumption. Traders are also eyeing potential Russia-Ukraine peace talks that could influence sanctions and future crude flows.

Asia Stocks Rebound as Tech Stabilizes, Australia Leads

Asian equities advanced Thursday as the recent tech-driven selloff showed signs of stabilizing, with Australia’s ASX 200 surging 1% to a record above 9,000 points on stronger PMI data and gains in financials and commodities. China’s CSI 300 rose 0.9% to its highest since October 2025, while the Shanghai Composite reclaimed a nine-year peak amid expectations of further policy support. South Korea’s KOSPI rebounded 1% after a three-day slide, while Japan’s Nikkei and TOPIX slipped 0.5% on ongoing manufacturing contraction. Hong Kong was flat as Baidu’s disappointing earnings offset sector gains, while India’s Nifty 50 held above 25,000.

Conclusion

The U.S. technology sector faces heightened scrutiny with AI-driven gains under pressure, while India grapples with earnings downgrades amid escalating trade tensions.

At the same time, oil markets are supported by tightening inventories, underscoring persistent demand strength.

In Asia, equities show resilience, with Australia and China advancing on positive economic data and policy expectations.

Global markets remain finely balanced as investors weigh stretched tech valuations, tariff risks, and shifting geopolitical dynamics against resilient economic signals. These developments highlight a phase of recalibration, where diversification and vigilance remain essential as markets adjust to evolving economic and policy landscapes.

Investment Insights

• Tech Valuations at Risk: Elevated multiples in U.S. technology stocks leave the sector vulnerable to rate uncertainty and profit-taking, suggesting near-term caution while maintaining selective exposure to AI infrastructure.
• India’s Equity Outlook: U.S. tariffs and earnings downgrades pose headwinds, but domestic tax reforms may create opportunities in consumer-driven and domestically focused sectors.
• Energy Positioning: The sharp U.S. inventory draw reinforces a constructive outlook for oil, making energy equities and related commodities a tactical hedge amid geopolitical risks.
• Asia-Pacific Rotation: Strong PMI readings and policy support in Australia and China highlight potential for diversification into cyclical and regionally driven growth stories.

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