Asian markets are poised to extend Tuesday's losses following a significant tech-led selloff on Wall Street, which intensified concerns that the AI-driven equity rally may have become overextended. Futures for equity indexes in Japan and South Korea registered lower, while Hong Kong contracts indicated modest gains. This comes after the tech-heavy Nasdaq 100 tumbled 3.3% and the S&P 500 fell 1.4% on Tuesday. A closely watched semiconductor gauge, which had more than doubled from its war-driven lows, slumped about 8%.
The global equity markets are experiencing heightened volatility amidst a re-evaluation of AI-linked stocks. This downturn reflects growing concerns among investors regarding the sustainability of massive spending commitments by technology firms and whether these will generate sufficient returns to justify elevated valuations and crowded positioning in AI-driven assets. Despite the recent pullbacks, equity markets are still on track to conclude the first half of 2026 with substantial gains. The MSCI All Country World Index has risen approximately 13% since the end of March, putting it on pace for its best quarter since the period ending December 31, 2020.
The focus is now intensifying on semiconductor companies, with Micron Technology's results on Wednesday being a critical event. These results are expected to provide crucial insights into whether the demand for AI infrastructure remains robust enough to sustain the rally that has seen Micron's shares increase more than 250% in 2026, despite a 13% drop on Tuesday. Veteran strategist Louis Navellier has described this report as the "grand finale" to a "stunning" earnings season, suggesting that any dip should be viewed as a buying opportunity. Attention on Micron's performance is further sharpened given the steep declines in other chip-heavy markets, such as South Korea's Kospi Index, which saw a 10% tumble in the previous session.
