Stocks declined as the artificial intelligence trade came under renewed pressure ahead of a key earnings season. The MSCI Asia Pacific Index lost 0.9%, set for its weakest close since mid-August, as shares retreated in South Korea and Japan. The Kospi Index slipped as much as 4.8%, set for its lowest close since July as chip bellwethers SK Hynix Inc. and Samsung Electronics Co. both tumbled more than 5%.
The Nikkei 225 Index dropped 2% after traders in Tokyo returned after a long weekend. As sentiment weakened, US equity-index futures lost ground in early Asian trading. Contracts for the tech-heavy Nasdaq 100 Index declined 0.5% after the underlying gauge retreated on Monday and a US gauge of chipmakers fell 2.7%.
Brent crude oil dropped 0.8% to around $105.80 a barrel. A Bloomberg gauge of the dollar’s strength broadly held its gains from the previous session, when it climbed to its highest since mid-May 2025. Enthusiasm for artificial intelligence eased as investors weighed the outlook for capital spending against rising borrowing costs.
With the S&P 500 Index nearly 120% above its 2022 low, the durability of the four-year bull market increasingly hinges on earnings keeping pace with elevated valuations. Warnings are mounting around the AI trade, with Broadcom Inc. Chief Executive Officer Hock Tan the latest to flag concerns. The AI boom has attracted investors whose strategies resemble those of gamblers, he said on Monday, suggesting some of them have little understanding of what they’re betting on.
Last week, billionaire Ray Dalio warned that AI is a “classic bubble” that is nearing a bursting point thanks to rising interest rates and the need to turn wealth into cash. Shares of SK Hynix and Samsung fell to their lowest level since August in early Asian trading after Sandisk Corp. slid 6% and Micron Technology Inc. declined 3.9% in the New York session. Competition is also increasing.
Chinese rival CXMT said it made progress on a memory-chip design capable of storing more data. Meta Platforms Inc. unveiled its Muse Wonder AI model. In Asia, focus will also be on the Indian rupee after the nation’s most aggressive currency defense in more than a decade is telling market watchers that the central bank is prepared to pull out all the stops to keep the rupee from weakening beyond 97 per dollar.
Meanwhile, the earnings season in the US gets underway Tuesday, with Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. due to report. Bank of America Corp. and Morgan Stanley follow Wednesday. S&P 500 companies are estimated to post a 25% increase in third-quarter profits from a year earlier, according to data compiled by Bloomberg Intelligence.
Investors will also be monitoring this week’s US consumer price index reading. Federal Reserve Cleveland President Beth Hammack said smaller, more frequent policy adjustments can help keep inflation expectations anchored, though she stopped short of backing another rate increase this month.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing