The key facts

  • Asian indices fell following the tech sell-off on Wall Street: the Nasdaq lost more than 2%
  • CoreWeave shares dropped about 30% over a month amid concerns about its debt burden
  • Investors await Tesla and Meta earnings and the Fed's rate decision next week

Sell-off spreads to Asia

Asian stock markets mostly declined on Monday, following a sell-off in US tech stocks driven by growing doubts about the investment boom around artificial intelligence. Chipmakers and AI-related companies again came under pressure due to concerns about rising inflation, costs, and questions about when the huge investments in the sector in recent years will start paying off. According to AFP, all three major US indices closed noticeably lower, with the Nasdaq losing more than 2% under pressure from giants such as Microsoft, Nvidia, AMD and Amazon.

CoreWeave and doubts about the AI economy

Markets are also alarmed by the large debt burden of the 'neocloud' company CoreWeave: its shares fell roughly 30% over a month, and yields on some of its bonds rose sharply. Reassuring comments from Nvidia chief Jensen Huang about CoreWeave's financial condition supported Asia on Friday, but optimism faded with the start of the new week. National Australia Bank analyst Rodrigo Catril noted that the US sell-off reflects 'a reassessment of the economy underlying the AI investment boom, rather than a simple downgrade of end demand,' and that investors increasingly wonder whether future earnings can justify the capital and financing needed for data centers, chips and energy infrastructure.

Fed rate expectations and corporate earnings

The past week was marked by sharp swings, ending overall positively on Friday, but investors remain on guard ahead of an important earnings season: Tesla and Meta report this week. Attention is also focused on the Fed's rate decision next week — bets on a second consecutive hike strengthened after US inflation data exceeded forecasts. Higher rates hit technology companies, many of which fund large investments through borrowing.

Asian index movements

In Tokyo, the Nikkei 225 fell 1.2% to 64,534.03 under pressure from SoftBank, Advantest and Tokyo Electron. Seoul slipped 0.2% to 5,656.47 due to losses among chipmakers SK hynix and Samsung. The Shanghai Composite dropped 0.4% to 3,702.32. Declines were also recorded in Taipei, Sydney, Singapore and Wellington; Hong Kong was closed for a holiday. The reaction to data showing China's economy grew 4.5% in the third quarter — slightly better than the AFP survey forecast — was muted.

Oil and currencies

Oil fell, but both major contracts held above $100 after rising more than 3% on Friday amid a significant drop in US commercial inventories. WTI slipped 0.8% to $100.62 a barrel, Brent fell 1.8% to $107.89. The decline came amid signs that supplies continue to leave the Middle East despite Iran's control of the Strait of Hormuz and ongoing attacks by Yemen's Houthis on key Saudi oil facilities. The euro fell to $1.1227 on concerns about the French economy, gripped by mass protests over the cost of living; President Emmanuel Macron condemned the 'unbridled' violence that erupted during the demonstrations.