33 mins ago
Asian markets slide as oil and AI concerns weigh
Asian stock markets fell on Monday.
Investors were worried because oil prices rose sharply.
Higher oil prices can make inflation worse.
That made investors expect interest rates to rise in the United States and Japan.
Technology and chip companies also lost value because people questioned whether AI businesses can earn enough to justify their large spending.
Several AI leaders called for a slower and safer pace of development.
Some investors think slowing AI spending could give companies more time to earn returns.
Markets are watching whether AI investment will produce enough profits to support high stock prices.
Asian equities fell as rising oil prices, rate-hike expectations and AI valuation concerns hurt sentiment.
South Korea’s benchmark dropped 3.3%, Japan’s Nikkei 225 declined 1.7%, and Asia-Pacific shares outside Japan fell 0.8%.
AI-linked stocks posted sharp losses, including SK Hynix, Kioxia, Samsung Electronics and Advantest.
Brent crude rose more than 2% Monday to about $107 a barrel after gaining nearly 9% the previous week.
Markets increased bets on quarter-point rate hikes by the Federal Reserve and Bank of Japan.
- Who
- Asian investors, technology and semiconductor companies, AI executives, the Federal Reserve and the Bank of Japan.
- What
- Asian equities declined as higher oil prices, expected interest-rate increases and concerns about AI valuations pressured markets.
- Where
- Across Asian markets, including Japan and South Korea; oil-supply concerns also centered on the Gulf and the Strait of Hormuz.
- When
- Monday, with potential rate decisions expected later in the week.
- Why
- Investors feared that elevated oil prices and higher bond yields could worsen inflation and reduce the value of high-growth technology stocks, while AI spending and returns remained uncertain.
Concerns over AI valuations and spending
Potential benefits of slower AI development
Investment and returns
Concerns over AI valuations and spending
Investors questioned whether AI-related earnings will justify the enormous infrastructure spending required for advanced models, leaving highly valued technology stocks vulnerable.
Potential benefits of slower AI development
Some investors believe moderating AI development and spending could give companies more time to generate returns from computing infrastructure already being deployed.
Pace and safety of development
Concerns over AI valuations and spending
Rapid AI development has raised concerns about the risks associated with increasingly powerful systems.
Potential benefits of slower AI development
Dario Amodei, Sam Altman and Elon Musk backed a broader push for slower development and stronger safety measures.
Key facts
- Brent crude
- Rose more than 2% Monday to around $107 a barrel after gaining nearly 9% the previous week.
- South Korea benchmark
- Dropped 3.3%.
- Nikkei 225
- Fell 1.7%.
- AI-linked stocks
- SK Hynix fell more than 5%, Kioxia dropped more than 9%, Samsung Electronics slipped about 4%, and Advantest declined 4.7%.
- US Treasury yield
- The 10-year yield remained close to 5%.
- Federal Reserve outlook
- Markets priced in an increased probability of a 25-basis-point rate hike on Wednesday.
- Bank of Japan outlook
- Investors assigned a high probability to a quarter-point rate increase later in the week.
Sources
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