Investors are keeping tabs on developments in Tokyo as the yen sits near a 40-year low against the dollar (Richard A. Brooks) · Richard A. Brooks/AFP/AFP
Asian equities fluctuated Tuesday following a tech-led sell-off on Wall Street as investors again questioned a long-running AI-fuelled boom, while crude largely held losses that came on the back of positive US-Iran talks.
While Washington and Tehran flagged progress at peace negotiations in Switzerland, traders are struggling to build on last week’s rally sparked by news of a deal to end the Middle East conflict.
Tech firms — the main driver of a surge across world markets as investors pile into all things AI — took a hit in Asia.
South Korean chip giants SK hynix and Samsung tumbled to drag the Kospi index down more than three percent, though it is still up more than 100 percent since the turn of the year.
Tokyo was also in the red, with tech investment titan SoftBank shedding more than seven percent and chipmaker Tokyo Electron down.
Taipei and Shanghai were down, with Hong Kong and Sydney flat. Singapore, Wellington and Manila edged up.
The tepid performance followed a sharp drop on Wall Street, where the Nasdaq sank more than one percent as market giants Amazon, Nvidia and Microsoft were sharply down.
But the main victim of the day was Elon Musk’s SpaceX, which plunged more than 16 percent — wiping hundreds of billions off its valuation — after a record IPO and a winning trio of opening trading sessions.
The fall came as the rocket and satellite company disclosed plans for an “inaugural” bond offering of unspecified quantity.
The SpaceX disclosure arrives on the heels of a large equity round announced earlier this month by Google parent Alphabet and a data centre venture between Microsoft and Chevron, developments which underscore the hefty capital toll of the artificial intelligence drive.
Monday’s selling revived worries about the wisdom of the vast sums being pumped into artificial intelligence with little sign of any returns being made soon.
Traders are also fretting over the extended valuations of some firms, with Nvidia topping $5 trillion.
“While the sector has performed exceptionally well, valuations have become stretched and the bar is now materially higher than it was a few months ago,” wrote Tony Sycamore at IG.
“Questions around capital expenditure and returns on artificial intelligence spending remain unanswered. While names like Intel and Micron are hitting fresh record highs, the Magnificent Seven (of top tech firms) has lost considerable momentum in recent weeks.
“Amazon and Nvidia are trading around 12 percent below their recent peaks, while Microsoft and Meta Platforms sit not far above their March lows.”
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