GLOBAL MARKETS-Asian stocks under pressure, oil near four-month low as volatility risks highlighted

Asian stocks struggled for direction on Wednesday, with some markets experiencing sharp gains and losses, amidst concerns over AI valuations and U.S.-Iran peace talks.

Asian stocks struggled for direction on Wednesday while crude oil prices extended declines to hover near four-month lows, as analysts cautioned about renewed volatility from stretched AI valuations and the prospects ‌for U.S.-Iran peace talks. MSCI's broadest index of Asia-Pacific shares outside Japan was last up 0.4% after swinging gains and losses. South Korean shares, which plunged 10% on Tuesday in their sharpest one-day drop since March, rallied 3.5%, while Japan's Nikkei shed 0.4% and Taiwan stocks lost 1.9%

"Price action in markets over the last seven trading days has ‌been alarming, not just when it falls, but also when it rises," said Michael McCarthy, market analyst at Moomoo Securities Australia. "When markets move so rapidly, in ‌either direction, it's a sign of instability." Oil prices fell more than 1% on Wednesday, extending this week's losses and trading near four-month lows, on signs that more oil tankers stranded in the Gulf are set to move out of the Strait of Hormuz. Still, uncertainty remains over the durability of the accord. The U.S. and Iran have provided conflicting accounts on what the two countries had agreed on as ⁠part of ​their peace deal, including key elements such ⁠as nuclear inspections and control of the Strait of Hormuz.

That gap in perceptions between Washington and Tehran "could become a source of concern going forward," Monex Securities' Yoshitaka Araya said. Taking cues from Asia, European futures ⁠were mostly down. The pan-region Euro Stoxx 50 futures and German DAX futures each fell 0.3%, while FTSE futures lost 0.67%. U.S. futures were largely steady, with S&P 500 E-minis up 0.1%, ​Nasdaq 100 E-minis 0.2% higher and Dow E-minis flat. The yield on benchmark U.S. 10-year notes fell 0.6 basis points to 4.487%.

Later on Wednesday, ⁠memory chipmaker Micron Technology is set to release its earnings, which could offer clues on the outlook for the memory and AI chip sector after a searing rally this year. In currency markets, the U.S. ⁠dollar ​extended gains to reach a fresh 13-month high against a basket of major currencies, with the dollar index edging 0.07% higher to 101.46.

The dollar's strength has weighed heavily on the yen, which traded at 161.53, keeping markets on edge over a potential currency intervention to prop up the battered Japanese currency. A summary of opinions ⁠from the Bank of Japan's meeting this month, in which the central bank decided to raise interest rates to a 31-year high of 1.00%, released on ⁠Wednesday showed policymakers debated mounting inflation risks, with ⁠some calling for faster interest rate increases to raise borrowing costs nearer levels deemed neutral to the economy. The euro weakened 0.15% at $1.1364 and sterling eased to $1.3192.

Spot gold extended losses, falling 1.1% to $4,064.01 an ounce, touching an almost two-week low as higher ‌rate expectations reduced the appeal ‌of non-yielding assets. In cryptocurrencies, bitcoin gained 0.2% to $62,499.52. Ether lost 0.2% to $1,658.09.