Asian stocks plunge as AI concerns intensify before US earnings

what happened

According to the Newsmetry API, Asian stocks dropped sharply on Tuesday as investors questioned the durability of the artificial-intelligence rally. Concern about stronger competition was compounded by the widening Middle East conflict ahead of the US earnings season. MSCI’s broadest Asia-Pacific share index excluding Japan fell 2.4% to a two-month low. South Korea’s KOSPI slid 6%, prompting a five-minute halt in program trading; Japan’s Nikkei lost 2.6%, while Taiwan’s TWSE:TAIEX declined 2%.

Nasdaq futures were down 0.77% and European futures fell 0.39%. US chipmakers had dropped overnight after reports of rapid technological advances by Chinese rival ChangXin Memory Technologies (CXMT). Kyle Rodda, a senior analyst at Capital.com, said the main concern was not the overall size of the AI market, but the prospect of a narrower US-China technology gap and the resulting pressure on margins and profits.

Brent crude futures stood at $105.9 per barrel, close to a two-week high. The euro was last at $1.1157, while the yen traded at 158.50 per dollar. Investors were also preparing for results from JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo. The US 10-year yield fell 4.8 basis points to 5.195%, while markets priced an 80.6% chance that the Federal Reserve would leave rates unchanged later this month, compared with 51% a month earlier.

US inflation data due on Wednesday will be another focus as traders assess the central bank’s policy path.

why it matters

The simultaneous rise in oil prices and elevated bond yields creates an additional challenge for richly valued growth stocks. Bank earnings and US inflation data may shape views on economic resilience and the Federal Reserve’s next steps.

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