Asian stocks mostly fell Monday as traders tracked a tech-heavy selloff on Wall Street that was fuelled by growing worries over the AI investment boom.
Chipmakers and other firms linked to artificial intelligence were once again under pressure owing to concerns about surging inflation, rising costs and questions about when the vast sums pumped into the sector in recent years would see a return.
Last week saw wild swings that ended on a largely positive note on Friday, though investors remain on edge heading into a crucial earnings season that sees tech titans Tesla and Meta report this week.
Markets have also been spooked by concerns about “neocloud” firm CoreWeave’s huge debt pile.
The company’s stock price has tanked around 30 percent this month as yields on some of its bonds soared, reflecting heightened angst over its future.
Reassuring comments from Nvidia chief Jensen Huang on CoreWeave’s financial health provided some support to Asia on Friday but that optimism faded as the new week started.
Investors are also looking to next week’s Federal Reserve interest rate decision, with bets on a second successive hike jumping after forecast-topping US inflation data. Higher rates hurt tech firms as many rely on borrowing to fund their huge investments.
All three main indexes on Wall Street ended sharply lower, with the Nasdaq more than two percent down, dragged by giants including Microsoft, Nvidia, AMD and Amazon.
“The US equity sell-off reflected a reassessment of the economics underpinning the AI investment boom rather than a simple downgrade to end-demand,” said National Australia Bank’s Rodrigo Catril.
“Investors are increasingly questioning whether future revenue can justify the capital and financing required for data centers, chips and power infrastructure.”
And the selling rolled over into Asia, where Tokyo was pulled down by tech investment titan SoftBank as well as Advantest and Tokyo Electron.
Seoul followed suit owing to more losses for chipmakers SK hynix and Samsung.
There were also losses in Taipei, Shanghai, Sydney, Singapore and Wellington. Hong Kong was closed for a holiday.
There was little immediate reaction to data showing China’s economy grew 4.5 percent in the third quarter, slightly better than forecast in an AFP survey.
Oil prices slipped but both main contracts held above $100 after soaring more than three percent Friday following a big drop in US commercial inventories.
The latest dip came on the back of signs that supplies continue to leave the Middle East despite Iran’s chokehold on the Strait of Hormuz and ongoing attacks by Yemen’s Houthis on key Saudi Arabian crude sites.
