Asian stocks hit two-month low as AI trade faces fresh doubts

what happened

Asian stocks fell to a more than two-month low on Tuesday, as a selloff in chipmakers intensified doubts about the AI trade and pushed investors toward government bonds, Newsmetry API reported. The MSCI broadest index of Asia-Pacific shares outside Japan (.MISX00000PUS) dropped more than 2% to its lowest since late July. Nasdaq futures fell 0.77% and European futures declined 0.2%. Samsung lost 8%, SK Hynix 10%, TSMC 1.8%, Kioxia Holdings 14% and SoftBank 8%.

The selloff followed reports of rapid progress by Chinese rival ChangXin Memory Technologies (CXMT), raising the possibility that Chinese companies could narrow the technology gap. South Korea’s KOSPI sank more than 6%, the Nikkei fell 2.6% and Taiwan’s TWSE:TAIEX declined 2%. CXMT dropped as much as 5.3%, while China’s blue-chip index reached its lowest level in more than a year. Investors are also watching Tencent Holdings’ bond offering, expected to raise at least $4.5 billion.

The benchmark 10-year Treasury yield eased 5 basis points to 5.193%, moving away from last week’s 24-year high of 5.364%. Markets price an 80.6% chance that the Federal Reserve leaves rates unchanged later this month, compared with 51% a month earlier. Brent crude futures stood at $105.9 per barrel, while the euro traded at $1.1173 and the yen at 158.34 per dollar.

why it matters

The move highlights how exposed the AI-heavy equity trade is to stronger competition as well as inflation, borrowing costs and energy prices. Investors now await US inflation data and results from JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo for further signals.

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