Souring mood on tech weighing on Asian markets
Safer assets such as bonds and the yen rose as tech-heavy stock markets braced for their heaviest weekly declines in seven months as investors fretted about how far the rally in AI stocks has progressed.
S&P 500 futures and Nasdaq 100 futures were slightly stronger on the Asian morning, while the Nasdaq fell 1.9 percent overnight.
The world’s largest technology index has fallen 2.8 percent so far this week; If that decline continues, it would mark the biggest one-week decline since March and be a jolt for the giant, which has gained more than 50 percent from the lows reached when the tariffs were announced in April.
Japan’s Nikkei fell 1.8 percent in morning trade, heading for its biggest weekly loss since late March at 4.7 percent, while Seoul’s Kospi fell 1.4 percent to 3.3 percent, its worst weekly loss since late March.
Chip and cable makers were among the biggest losers, with tech investor Softbank Group Corp losing more than 20 percent this week. Bitcoin, sometimes a bellwether for tech sentiment, fell 8 percent on the week to $101,092.
There is no clear reason driving the decline in AI-related share prices, but the market’s reaction to the latest results shows how some fears about a bubble in the sector and questions about profitability are starting to surface.
Late last month, Meta shares tumbled after the company announced it would spend large capital expenditures as it builds data centers powered by artificial intelligence. Shares of data and artificial intelligence company Palantir Technologies also fell, despite beating earnings estimates.
“Sometimes it’s a gradual shift in markets where more and more people say, ‘I’m in a good position… maybe I’ll take some money off the table,'” said Herald van der Linde, head of equity strategy for Asia Pacific at HSBC.
“And the second one says so. And the third one. And the fourth one says, hey, these three are selling. Maybe I might be selling too, right? So this is a shift in market sentiment that has its own dynamic. This might be developing a little bit right now.”
The S&P 500 closed the night down 1.1 percent and the Philadelphia SE Semiconductor index fell 2.4 percent.
Bond markets rose as demand for safety and some second-tier U.S. employment data pointed to a wave of layoffs in the U.S. that could support further interest rate cuts.
Benchmark 10-year U.S. Treasury yields fell 6.4 basis points overnight to 4.09 percent after staffing firm Challenger, Gray & Christmas said there was an increase in layoffs announced in October.
While such private research has garnered attention in the market, the prolonged US government shutdown has also halted the release of official US data.
The drop in yields caused the dollar to fall about 0.5 percent overnight to $1.1546 per euro.
Losses were slightly larger in safe-haven currencies such as the yen and Swiss franc, while the dollar was last at 153.17 yen and 0.8069 francs.
Sterling jumped after the Bank of England kept interest rates steady, but the possibility of a rate cut in December capped gains and traded just below $1.3128 in Asia.
Gold held firm at just under $4,000 per ounce. Brent crude oil remained at $63.64 per barrel.
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