Asian stocks traded in a tight range at the open after losses on Wall Street as signs of fatigue crept into the AI-fueled equity rally.

Shares in Japan and Australia edged up while those in South Korea retreated. The S&P 500, Nasdaq 100 and a gauge of global stocks each dropped 0.3% Wednesday, extending declines from the prior day. 

An index of US-listed Chinese companies rallied against the downcast mood on Wall Street to climb 2.8%. Equity-index futures for Hong Kong retreated as the city returns to normalcy after Super Typhoon Ragasa. Insurance claims from the typhoon can be $50 million to $100 million, according to Bloomberg Intelligence.

Treasury yields steadied after rising across the curve in the prior session. An index of the dollar edged 0.1% lower after climbing Wednesday. Investors will also focus on the sale of 40-year Japanese government bonds Thursday.

Wednesday's retreat signaled a breather for an AI-driven surge that has already lifted the S&P 500 about 12% this year as investors rushed to names like Nvidia Corp. That momentum appeared to dissipate Wednesday as traders awaited fresh catalysts amid risks stemming from a labor-market slowdown to sticky inflation.

"Timeout called," said Craig Johnson at Piper Sandler. "The trend of strong gains isn't over yet. However, the short-term risk-reward profile is becoming more compressed as stocks extend higher while underlying momentum fades."

Source: Bloomberg.com