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AI doubts drag Asian stocks lower

Questions over the profitability and financing of the AI boom drove Asian shares lower on Tuesday, with South Korean chipmakers particularly hard hit. The regional sell-off contrasted with Monday’s technology-led gains on Wall Street, while European markets finished lower amid rising bond yields. Investors now turn to quarterly results from Netflix and SpaceX on Tuesday for fresh indications of corporate performance and the outlook for technology investment.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Asian equities slide on AI concerns

South Korea’s KOSPI fell 4.2% on Tuesday, leading Asian equity losses as concerns about the funding and returns of artificial intelligence investment weighed on technology stocks ahead of major earnings releases. Japan’s Nikkei 225 lost 1.5% and Hong Kong’s Hang Seng dropped 1.3%, despite a recovery in US semiconductor shares on Monday. Memory-chip producers SK Hynix and Samsung Electronics dropped, as investors awaited results from technology heavyweights for indications of future AI spending. Meanwhile, Brent crude oil futures rose 0.4% to USD 110.00 a barrel, remaining near a five-month high as concerns about Middle Eastern supply disruptions supported prices. The US Dollar Index declined 0.2% to 101.79, while gold slipped 0.3% to around USD 4130 per ounce.

China leaves benchmark lending rates unchanged

China maintained its one-year loan prime rate at 3% and its five-year rate at 3.5% on Tuesday, matching market expectations and extending the pause in rate adjustments to 17 months. The decision followed stronger-than-expected economic growth of 4.5% year-on-year in the third quarter, up from 4.3% in the second quarter, as robust exports counterbalanced subdued domestic consumption. Policymakers are balancing support for activity with concerns over bank profitability, while continued weakness in housing demand and investment remains a challenge. The improving growth figures reduce the immediate case for broader monetary easing as Beijing pursues its annual growth target of 4.5-5%.

US technology stocks rebound after sell-off

The Nasdaq 100 rose 1.2% to 29,529.35 points on Monday as investors returned to US technology stocks, after the index had fallen 7% from its recent record high by Friday. The S&P 500 gained 0.4% to 7690.73 points, while the Dow Jones Industrial Average edged down 0.1% to 51,966.03 points. Semiconductor stocks helped drive the recovery, with Sandisk and Western Digital advancing 5.5% and 6.1%, respectively, while online retailer and cloud-computing provider Amazon climbed 5% after Morgan Stanley named it a preferred investment. The rebound remained vulnerable to concerns about returns on artificial intelligence infrastructure spending, with upcoming corporate results likely to influence confidence in the sector.

European equities fall despite technology rebound

European equities declined on Monday, with the Euro Stoxx 50 losing 1% to 6146.85 points as rising bond yields and concerns about financing artificial intelligence investment weighed on sentiment. Switzerland’s SMI slipped 0.2% to 14,368.78 points. Technology was the only sector to advance in the Stoxx Europe 600, helping major indices recover some losses late in the session as US technology shares rebounded. Banks and resources stocks were among the weakest performers.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from ABB, Chubb, Deutsche Boerse, EssilorLuxottica, GE Aerospace, Intuitive Surgical, Netflix, RTX, and SpaceX.

Economic data in focus: UK unemployment rate (08:00), Swiss trade balance (09:00), German ZEW Indicator of Economic Sentiment (11:00), Bundesbank monthly report (12:00), US building permits (14:30).

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