Stocks Head for Worst Week Since April Following AI Slump – Asia Market Wrap

Stocks are on track for their worst week in seven months, as investors flee riskier assets due to concerns about high valuations and whether large investments in AI will pay off.

The MSCI All Country World Index has fallen over 3% this week, on course for its biggest weekly drop since April 4, when Trump’s tariffs shook markets. Asian stocks sank 1.5% on Friday, marking their biggest weekly drop since April, after Wall Street indices dipped on Thursday. Adding to the cautious atmosphere, cryptocurrencies fell, with Bitcoin selling at around $86,000.

In Asia, the spotlight was on Japan, where PM Takaichi’s cabinet approved the most extensive amount of additional spending since the outbreak. The Yen remained stable versus the Dollar following the stimulus plan, which included ¥17.7 trillion ($112 billion) in general account spending.

Market mood is negative, as persisting concerns over stretched valuations and excessive tech expenditure stifled a surge fuelled by Nvidia’s optimistic projection, with the AI bellwether’s shares falling 3.2%. Adding to the uneasiness was continued doubt about the Fed’s ability to drop interest rates next month, as recent remarks from policymakers cautioned against easing policy too quickly.

Oil was expected to fall more than 2% this week, with Brent trading below $63 a barrel. Crude fell as Ukrainian President Zelenskiy agreed to work on a peace proposal, just as US sanctions against two Russian oil majors were set to go into force on Friday.