Asian stocks were set to fall Monday, tracking Friday's sharp Wall Street selloff as a rout in technology shares deepened concerns that the artificial intelligence rally may have gone too far. Equity-index futures for Japan and South Korea pointed lower, while those for Australia were little changed after disappointing US tech earnings triggered the worst stock selloff since June. The Nasdaq 100 tumbled 3.5% and briefly entered a technical correction. Intel Corp. suffered its steepest drop in more than four decades, the S&P 500 slid 1.8% and breached its 100-day moving average, and the Philadelphia Semiconductor Index plunged 7.2%.
Brent crude advanced as traders weighed the risk of renewed US military action against Iran and potential disruptions to Middle East supplies, after several tankers were targeted in the Strait of Hormuz over the weekend. Gold fell 3.7% to its lowest close in more than a year. Investors are showing less tolerance for tech companies whose core businesses are slowing as AI spending surges. Results from Alphabet Inc. and Amazon.com Inc. fueled concerns that AI is eroding the businesses financing those investments. Matt Maley at Miller Tabak said the payoff everyone has expected is being pushed further down the road.
The advertising, consumer and retail businesses underpinning a collective $750 billion in AI spending by America's tech giants this year are beginning to show signs of slowing. Elsewhere, Binance recorded a net outflow of $3.6 billion in cryptoassets after restoring customer withdrawals on Sunday, following Thursday's $6.3 billion hack. In China, the central bank and securities regulator will meet Monday to discuss tools to support the capital market. The CSI 300 Index entered a bear market in October, falling 8.5% and dropping for a record 12 straight weeks.
The Cboe Volatility Index touched its highest intraday level since April, and demand for puts protecting against further losses surged. Still, those stress measures remain well below March levels reached after the US and Israel attacked Iran. Morgan Stanley's Mike Wilson said he sees several "clearing events" ahead that could temporarily push stocks lower and create buying opportunities. Florian Ielpo of Lombard Odier Investment Management said the move looks more like a bullish rotation than the start of a broad market deterioration.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing