Asian stocks are poised to continue their decline after a significant tech-led selloff on Wall Street, which has deepened worries that the AI-driven equity rally has gone too far. Futures for Japan and South Korea's equity markets indicate lower openings, while Hong Kong contracts suggest modest gains. This follows a Tuesday where the tech-heavy Nasdaq 100 plunged 3.3% and the S&P 500 fell 1.4%. A key semiconductor gauge, which had more than doubled from its war-driven lows, also slumped approximately 8%.
The global selloff in technology giants has sparked concerns that the artificial intelligence frenzy powering the equity bull market might be exaggerated. The Nasdaq 100 dropped 3.5%, and the semiconductor gauge slid 8.5%. Losses were more pronounced in Asia, with South Korea's Kospi plunging 10% from a record high during Tuesday's trading, marking one of its steepest historical plunges. This rapid unwind was partly due to leveraged positions.
Investors are now eagerly awaiting memory chipmaker Micron Technology's quarterly results, due on Wednesday. This report is seen as a critical test to determine whether AI spending can sustain its current rally and the broader tech market's run-up. Micron's shares are up more than 300% this year, despite falling 13% on Tuesday. Analysts like David Savage from Macro Squawk noted increasing concerns about the prudence of unprecedented AI infrastructure investment from major US hyperscalers. The market prepares to close the first half of 2026 with substantial gains, largely driven by the AI trade, easing geopolitical tensions, and solid corporate earnings. The MSCI All Country World Index is up about 13% since the end of March, on track for its best quarter since late 2020.
