HONG KONG – Asian stocks were mixed yesterday following a Wall Street selloff fuelled by growing worries over the AI investment boom, though bargain-buying ahead of upcoming earnings provided some support.
Chipmakers and other firms linked to artificial intelligence were 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, with markets also spooked by concerns about “neocloud” firm CoreWeave’s huge debt pile.
The company’s stock price has tanked around 30% 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 uncertainty remains high.
Investors are looking to a crucial earnings season that sees tech titans Tesla and Meta report this week.
Also in view is next week’s Federal Reserve interest rate decision, with bets on a second successive hike 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 centres, chips and power infrastructure.”
And the selling rolled over into Asia, where Tokyo’s Nikkei 225 was pulled down by tech investment titan SoftBank as well as Advantest and Tokyo Electron, among others.
However, Seoul jumped 1.8% thanks to a pick-up in chipmakers SK hynix and Samsung.
Elsewhere in the region, Sydney, Shanghai, Bangkok and Singapore rose, though Wellington, Taipei and Mumbai fell. Hong Kong was closed for a holiday.
Jakarta sank more than five%, extending Friday’s plunge of more than 11% that came after index compiler MSCI said it was “no longer appropriate” to maintain the country’s emerging-market status, fuelling fears of an exodus of foreign investment.
Futures on Wall Street bounced.
There was little major reaction to data showing China’s economy grew 4.5% in the third quarter, slightly better than forecast in an AFP survey.
Oil prices slipped, but Brent held above US$100 after soaring more than three% Friday in reaction to 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.
On currency markets, the euro fell on concerns about the French economy as the country is hit by widespread protests, with President Emmanuel Macron slamming the “unbridled” violence that erupted in cost-of-living demonstrations.
Paris stocks opened deep in the red, while London and Frankfurt also retreated.
– Nampa/AFP
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