Asian stocks are anticipated to fall following a significant selloff in US semiconductor shares. This downturn is attributed to increasing concerns that the rate of artificial intelligence development might slow. The Philadelphia Semiconductor Index specifically tumbled 5.9%, marking its largest drop in over two months, with major players like Nvidia Corp. and Intel Corp. experiencing declines. This sentiment was exacerbated by calls from industry figures, including Anthropic CEO Dario Amodei, for a coordinated slowdown in AI development to better understand its risks, a sentiment echoed by OpenAI CEO Sam Altman and SpaceXAI CEO Elon Musk.
Adding to market pressures, inflation worries have resurfaced, pushing the 10-year Treasury yield above 5% for the first time since 2023. This rise in bond yields impacts stock valuations as future corporate profits become less valuable in present terms. The elevated oil prices, with Brent crude advancing 0.7%, further fueled inflation concerns ahead of the Federal Reserve's policy announcement. Traders are pricing in a high probability, over 90%, of an interest rate hike by the Fed this week, following the European Central Bank's recent rate increase.
Despite the broader decline, some tech firms in South Korea and Japan saw a slight recovery from Monday's losses. Samsung and SK Hynix edged up in Seoul, while Kioxia and SoftBank posted gains in Tokyo, though they did not fully recoup previous day's losses. Investors remain cautious as they weigh Middle East tensions, elevated oil prices, and rising bond yields against the backdrop of upcoming central bank meetings in the US and Japan.
