Asia Stocks Rebound, Led by Chipmakers; Indonesia Plunges 11% on MSCI Downgrade

Asian stock markets rebounded broadly on Friday, retracing part of the previous session’s heavy losses as technology and chipmaker shares steadied. The exception was Indonesia, whose benchmark equity index plunged 11 percent — the most since 1998 — after MSCI said the country’s market no longer merited “emerging market” status and proposed cutting it from a suite of products tracked by global investors.

Japan’s tech-heavy Nikkei 225 rose 1.9 percent, regaining ground after Thursday’s nearly 5 percent tumble. South Korea’s KOSPI climbed 3.3 percent, following an almost 8 percent plunge. Taiwan’s stock benchmark added 0.3 percent and Hong Kong’s Hang Seng rose 1 percent. Mainland Chinese blue chips were little changed. Australia’s S&P/ASX 200 advanced 1.01 percent to 8,807.70, according to NDTV Profit. US stock futures edged higher, with Nasdaq and S&P 500 futures each up 0.2 percent after the cash indexes notched small gains on Thursday. Pan-European STOXX 50 futures rose 0.7 percent.

The rebound followed a broad sell-off on Thursday driven by fears over the financing of artificial intelligence investments, after questions about cloud company CoreWeave’s debt pile sent its bond yields to levels associated with distressed debt. Shares of Nvidia-backed CoreWeave recovered some composure on Thursday, the Reuters report said. Analysts also pointed to pressure on memory maker shares this week after China’s ChangXin Memory Technologies reported progress on a next-generation DRAM architecture that could intensify competition with established manufacturers.

“Global markets are getting very noisy once again after a period of low volatility,” Kyle Rodda, a markets analyst at Capital.com, wrote in a client note cited by Reuters. “Global markets could potentially be in for a protracted period of this sort of volatility,” he added, with tech earnings due and markets assessing the trajectory of key interest rates.

**Indonesia Rout Deepens**

MSCI’s proposal to reclassify Indonesia out of its emerging-market indexes is a major setback likely to send money fleeing the Southeast Asian market. “The proposal highlights MSCI’s dissatisfaction with the pace of reforms and raises further questions about the investability of the market,” said Tan Altundag, investment manager for emerging equities at Pictet Asset Management, according to Reuters. Altundag, who holds no Indonesian assets, added that the investment implications could be significant.

**Bond and Currency Markets Calm**

Bond markets stabilized after yields plunged on Thursday as traders sought safe havens. Lower US yields this week sapped demand for the dollar, with the dollar index languishing below 102 after a pullback from a 1½-year high near 103, down 0.3 percent for the week. The euro recovered to $1.1226 from a low of $1.1113 on Wednesday. Sterling edged up to $1.3295, building on a 0.6 percent jump Thursday. The dollar was little changed at 157.86 yen.

**Commodities: Gold Edges Up, Oil Mixed**

Gold inched higher to around $4,173 after climbing 1.6 percent on Thursday amid safe-haven demand. Crude oil edged lower as investors weighed Middle East risks and a potential US move to ease sanctions on the world’s “shadow fleet” of tankers, according to a US official cited by Reuters. The escalating conflict between Saudi Arabia and Yemen’s Houthis and renewed maritime attacks have supported prices.

Brent crude futures eased 0.7 percent to $105.14 a barrel, while US West Texas Intermediate fell 0.7 percent to $97.26. Separately, uncertainty over oil shipments through the Persian Gulf increased after US Central Command confirmed an Iranian projectile struck a container ship that sank in the Strait of Hormuz earlier this week, NDTV Profit reported. The incident added to supply concerns.

**Central Bank Views and Inflation Watch**

Federal Reserve Chair Kevin Warsh expressed optimism about US economic strength at the IMF/World Bank meetings in Bangkok on Friday, but gave little away on the chances of a rate hike this month, repeating that he does not “prejudge meetings,” Reuters reported. Bank of England Governor Andrew Bailey said soaring energy prices from the Iran war appeared to have limited wider effects on British prices so far, but cautioned it was too soon to draw firm conclusions.

NDTV Profit noted that stronger-than-expected US consumer price data for September — a 0.6 percent monthly rise and 3.7 percent annual increase — has raised the prospect of further Fed rate increases. The combination of persistent inflation, elevated energy prices and uncertainty over interest rates remains a key factor for global markets.