Asian Markets Slide As AI Selloff Hits South Korea, Japan Shares; Here Are The Top Factors Fuelling The Decline

Asian markets fell on Tuesday, 13 October, as selling in artificial intelligence-linked stocks spread across the region ahead of a busy week of US corporate earnings.

The MSCI Asia Pacific Index dropped 0.9%, putting it on track for its weakest close since mid-August. South Korea led the losses, with Japan and Taiwan also trading lower.

South Korea's Kospi index tumbled 5.24%, moving closer to its lowest closing level since July. Chipmakers SK Hynix and Samsung Electronics both fell more than 5% as investors pulled back from stocks tied to the AI trade.

Japan's Nikkei 225 index lost 2.34% after markets reopened following a long weekend. The broader Topix slipped 0.45%, while Taiwan's TAIEX declined 1.22%. Hang Seng futures were little changed.

AI Stocks Face Fresh Selling Pressure

The latest decline comes as investors reassess whether expected spending on AI will be enough to justify the high valuations of technology companies.

US markets set the tone for the Asian session. Nasdaq 100 futures fell 0.5% in early trading, following a decline in the index on Monday. A US semiconductor stock gauge had dropped 2.7% during that session.

The S&P 500 has climbed nearly 120% from its 2022 low, leaving investors with high expectations for corporate earnings. Companies now face pressure to show that their profits can keep up with those valuations, particularly as borrowing costs rise.

US Bank Earnings And Inflation Data In Focus

Investors are turning their attention to the September-quarter earnings season in the US. Goldman Sachs, JPMorgan Chase, Citigroup and Wells Fargo are scheduled to report results on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday.

The results could offer clues about the health of the US economy and the outlook for corporate profits. Investors will also watch the US consumer price index due this week for signs of whether inflation is easing or remaining persistent.

Yen Strengthens As RBI Defends Rupee

Currency movements were relatively modest across Asia. The Japanese yen strengthened 0.1% to 158.42 against the US dollar, while the offshore yuan was little changed at 6.6952.

The rupee will also remain in focus after the Reserve Bank of India (RBI) stepped up its efforts to limit the currency's decline. The central bank's latest action signals a stronger push to prevent the rupee from weakening beyond 97 per dollar.

Oil Prices Edge Lower

Oil prices slipped during Asian trading. Brent crude fell 0.8% to around $105.80 a barrel, while US West Texas Intermediate crude declined by the same margin to $92.98.

With US earnings and inflation data due this week, investors will be watching whether the pressure on technology stocks spreads further or eases as fresh results come in.

Also Read - India CPI Inflation Jumps To 5.54% In September As Onion Prices Double, Food Inflation Hits 7.74%