AI and Chip Stock Selloff Spreads to Asia and EM Ahead of Central Bank Week (SK Hynix, Copper)

Gotrade News - The AI and chip stock selloff spread across Asia on Monday, with South Korea's KOSPI ending 1.5% lower as concerns over the sustainability of AI spending weighed on semiconductor stocks, according to Investing.com.

As reported by Seeking Alpha, tech-heavy indices led Asian markets lower from the open, while a global pullback in AI and semiconductor valuations kept weighing on risk sentiment ahead of a major central bank policy and earnings week.

The weakness followed a down day on Wall Street, which ended lower on Friday amid surging energy prices and AI trade concerns, per Investing.com. Oil prices eased on Monday after surging to six-month highs last week, when Brent climbed 6.2% on attacks by Yemen's Houthi militants in Saudi Arabia, which limited some of the losses in equities.

KOSPI Falls 1.5% as Foreigners Sell 695.5 Billion Won

The KOSPI closed at 5,469.47, down 80.83 points, Yonhap News Agency reported, leaving the index nearly 40% below its June peak, according to Aju Press. Foreign investors sold a net 695.5 billion won of shares and decliners outnumbered advancers 790 to 101, Yonhap said, while the KOSDAQ dropped 3.3% to 727.2, per Aju Press.

Chipmaker SK hynix slipped 0.2% to 1,275,000 won after surrendering an intraday gain of more than 2%, while Samsung Electronics fell 1.2% to 213,000 won, Aju Press reported. Brokerages cited in the report said buying support has thinned since the two chipmakers completed large share buyback programs, leaving the Korean market more exposed to foreign flows.

SK hynix is due to report quarterly earnings on Wednesday, according to Aju Press. Investing.com named SK hynix and Samsung among the companies in focus as Asia enters one of its busiest earnings weeks, with around 550 of the roughly 1,200 companies in the MSCI Asia-Pacific index set to report, citing Bloomberg data.

Tokyo Electron, Renesas and Chinese Chipmakers Extend the Slide

In Tokyo, the Nikkei 225 fell 0.8% while the broader TOPIX rose 0.2%, per Investing.com, with Renesas and Tokyo Electron each down more than 3.5%. Aju Press put the Nikkei's close at 62,189.7, its third straight decline, as doubts over AI monetization weighed on Tokyo Electron and Advantest.

The chip pressure reached Greater China as well. Hong Kong's Hang Seng rose 0.4%, but chipmakers SMIC and Hua Hong fell 2.6% and more than 5%, respectively, according to Investing.com. Mainland China's CSI 300 inched down 0.3% and the Shanghai Composite was flat, while India's Nifty 50 ticked 0.1% lower and Singapore's Straits Times Index dipped 0.3%.

Copper Trades Below $6.50 as AI Doubts Dent Risk Appetite

The selloff also reached industrial metals. Copper futures traded below $6.50 a pound, near multi-week lows, as persistent concerns over the artificial intelligence sector dampened risk appetite and investors waited on megacap tech earnings for signals on the AI trade, according to Trading Economics.

Doubts over whether the US will impose levies on refined copper imports before the midterm elections added pressure, Trading Economics said, although labor strikes at major miners threaten supply. The metal remains below its record of $6.85 a pound, set in September after traders shipped metal to US warehouses ahead of possible tariffs.

Fed, ECB and BOJ Decisions Meet Microsoft, Alphabet and Amazon Earnings

The Federal Reserve, the European Central Bank and the Bank of Japan are all scheduled to announce policy decisions this week, according to Investing.com. The Fed is widely expected to leave rates unchanged, with investors scrutinizing its guidance for clues about the outlook for borrowing costs, while the Bank of Japan is widely expected to keep its policy rate at 1.25% following its September increase. New Zealand's central bank is expected to raise rates on Wednesday.

On the corporate side, investors will look to the quarterly earnings reports of Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN) for evidence that data-center spending is translating into revenue and profit growth, per Investing.com. US stock index futures were mixed in Asian trading on Monday, with the tech-heavy Nasdaq edging lower.

Sources

• Tech sell-off pressures Asian stocks ahead of central bank policy week (Seeking Alpha)
• Asia stocks slip as chipmakers retreat; earnings, central bank meetings loom (Investing.com)
• (LEAD) Seoul shares dip over 1 pct ahead of earnings reports, Fed decision (Yonhap News Agency, via K-VIBE)
• Foreign selling sinks Seoul stocks below 5,500 (Aju Press)
• Copper: Price, Chart, Historical Data and News (Trading Economics)