Asia Stocks Pause as Tech Earnings, Fed Signals, and Dollar Weakness Drive Markets

Asian stock markets took a breather on Thursday after a strong rally, as mixed tech earnings and caution ahead of Apple’s results prompted investors to reassess risk. Market sentiment was also influenced by a shaky U.S. dollar, surging commodity prices, and fresh geopolitical tensions, keeping global financial markets on edge.

Equities across Asia pulled back slightly, with South Korean stocks slipping 1.2% despite having surged more than 20% earlier in the month. Taiwan’s tech-heavy market, still up nearly 14% over the same period, also eased. Japan’s Nikkei edged down 0.1%, weighed by sharp currency swings and rising domestic bond yields. MSCI’s broad Asia-Pacific index excluding Japan fell 0.6%, signaling a pause in momentum rather than a full reversal.

On Wall Street, U.S. stock futures dipped as investors digested contrasting signals from major technology companies. Microsoft shares dropped sharply after concerns that its aggressive AI capital expenditure may not deliver sufficient returns, while Meta’s strong revenue outlook and higher AI spending plans boosted its shares significantly. Attention now centers on Apple’s earnings, with expectations of solid performance driven by iPhone demand and tighter cost control.

The U.S. Federal Reserve kept interest rates unchanged, as widely expected, with Chair Jerome Powell highlighting an improving economic outlook. Markets responded by scaling back expectations for near-term rate cuts, though June remains the most likely window for easing. Political pressure on the Fed and uncertainty around U.S. fiscal policy continued to weigh on the dollar.

Currency markets reflected this uncertainty, with the euro rising toward $1.20 and the dollar weakening against the yen and Swiss franc. Analysts warned that sustained dollar weakness could prompt central banks, including the European Central Bank, to consider interest rate cuts.

Rising demand for hard assets pushed gold and silver to record highs, while oil prices climbed to four-month peaks amid concerns that potential U.S. action against Iran could disrupt global supply. Overall, global markets remain finely balanced between optimism around earnings and AI growth, and caution driven by policy uncertainty, geopolitics, and stretched valuations.