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Commerzbank Says Equities, U.S. Stock Futures Slip on AI Exit, Treasuries Extend Gains, Brent Oil Steady

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Equities remained under pressure, with South Korea's Kospi (-6.4%) and Japan's Nikkei (-5.8%) leading the continuation of the Artificial Intelligence-driven sell-off, while U.S. equity futures also extended the previous session's losses, according to a note from Commerzbank.

Treasuries extended gains during the Asian session, noted Commerzbank.

Brent oil held steady around $85 a barrel, trading within a narrow range despite the exchange of attacks between the US and Iran. The Japanese yen remained stable, while Japanese government bonds posted a mixed performance, said the bank.

Finance Minister Satsuki Katayama said Japan is prepared to take decisive action to support the yen if necessary.

Kansas City Federal Reserve President Jeff Schmid said his primary concern is that inflation could remain "too hot" for "too long," warning that price pressures may accelerate further. Dallas Fed President Lorie Logan reiterated that interest rates may need to move "modestly higher," while Fed Vice Chair Philip Jefferson said policymakers should remain open to additional rate hikes if inflation does not continue to ease, although he believes the current policy stance is well-positioned.

Bloomberg survey results indicate that 75% of economists expect the European Central Bank's final 25bps rate hike to come in September, with no economists expecting a hike at next week's meeting, said Commerzbank.

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