Asian stock markets are expected to fall following a significant selloff in US semiconductor companies. This downturn is attributed to growing concerns that the rapid pace of artificial intelligence development might decelerate. Adding to market anxieties, inflation fears briefly pushed the 10-year Treasury yield above 5%, a level not seen since 2023.
Equity-index futures for major Asian markets including Japan, South Korea, and Australia all indicated a downward trend. This follows a substantial 5.9% tumble in the Philadelphia Semiconductor Index, marking its largest single-day drop in over two months. Prominent chipmakers such as Nvidia Corp. and Intel Corp. were among the significant decliners in the US market.
The broader market sentiment is also impacted by calls from leading AI companies to slow down the technology's development, which is raising questions about a sector that has been a primary driver of this year's market rally. This reassessment of the AI trade comes as investors weigh whether these warnings will curb corporate spending and challenge earnings expectations across the AI supply chain. The situation is further complicated by rising oil prices, which are fueling inflation concerns and keeping borrowing costs elevated, with the Federal Reserve expected to potentially raise interest rates this week.
