Stocks Fall as Oil Drops & Chip Selloff Intensifies – Asia Market Wrap

Stocks extended their global selloff as growing doubts over returns from massive AI spending sparked another sharp decline in chipmakers. MSCI’s Asia Pacific Index fell as much as 3.6% to its lowest level since May, putting it on track for a technical correction. South Korea’s Kospi led regional losses, plunging 10%, while Samsung and SK Hynix both dropped more than 11% amid concerns over funding pressures and rising competition from Chinese rivals.

The weakness followed another selloff in US semiconductor stocks, with a key chip index falling for a third consecutive session. Technology shares led declines across Asia, dragging benchmarks in Japan and Taiwan down more than 3%. Nasdaq 100 futures fell 0.8%, pointing to continued pressure on US tech stocks, while European markets were set for a subdued open.

Meanwhile, oil prices extended their decline after the US paused strikes against Iran and Trump said there was a “good chance” of reaching a deal with Tehran. Brent crude fell a further 1.3% to around $87.25 a barrel, easing inflation concerns and supporting government bonds. The US 10-year Treasury yield fell 2 bps to 4.63%.

The sharp retreat in chip stocks has increased the importance of a packed week of market-moving events, including policy decisions from the Fed, BoJ and BoE, alongside earnings from several megacap technology companies.

Investors will be looking for reassurance that the largest AI spenders can generate sufficient returns to justify the billions of Dollars being invested, after recent volatility raised fresh questions over whether the sector’s lofty valuations can be sustained.