Asian markets slide as AI funding worries pressure tech shares

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Asian markets slide on ai worries

Highlights

Japan's Nikkei drops 2.0% and South Korea falls 1.6% as investor concerns about AI infrastructure funding pressure regional tech shares before key earnings reports.
Brent futures slide 1.6% to $108.06 and U.S. crude falls 0.7% to $100.70 after U.S. President Trump announces waivers of some Russia sanctions, boosting sovereign bonds and Wall Street futures.
The 10-year Treasury yield drops 3 basis points to 5.0645% as investors flock to safe assets on geopolitical tension, aiding a 0.5% rise in S&P 500 futures and 0.8% in Nasdaq futures.

Tech funding concerns dominate trading

As reported by Reuters, investors are reassessing whether future AI revenue will justify the massive upfront spending required to build infrastructure, a concern that is hitting regional technology stocks and shaping sentiment before major corporate results.

Japan's Nikkei falls 2.0% after losing 5.4% last week, while South Korea drops 1.6% after shedding more than 14% over the same period. MSCI's broadest index of Asia-Pacific shares outside Japan eases 0.3%, while the PHLX Semiconductor Index lost 11.4% last week in its longest losing streak since 2008.

My Bui, an economist at fund manager AMP, says investors have long worried that AI revenues may not be enough to recoup the scale of investment, while depreciation and potential write-downs of aging infrastructure could sharply reduce book value. She adds that rising government bond yields and wider corporate credit spreads are increasing financing costs, making it harder to borrow, refinance and sustain AI infrastructure expansion.

Markets are now looking to earnings from Meta on Wednesday, alongside Lam Research, Texas Instruments, SpaceX and Tesla. According to Goldman Sachs, Meta is one of five AI hyperscalers expected to lift combined capital spending to about $1.2 trillion next year, while other companies due to report include Netflix, Procter & Gamble, General Motors and GE Aerospace.

Oil retreat supports bonds and U.S. futures

A drop in crude prices is helping limit broader market losses by supporting sovereign bonds and lifting Wall Street futures. Brent futures fall 1.6% to $108.06 a barrel and U.S. crude futures lose 0.7% to $100.70 after U.S. President Donald Trump decides to waive some sanctions on Russia, though he later says a final decision has not been made.

U.S. Secretary of State Marco Rubio says the president will take up to 60 days to assess the economic impact of such a move, while Iran reports that another tanker has hit a mine in the Strait of Hormuz. The combination of geopolitical tension and a shift into safer assets extends the rally in sovereign debt, with the 10-year Treasury yield down 3 basis points at 5.0645% after its largest weekly fall in more than eight months.

That bond support helps S&P 500 futures rise 0.5% and Nasdaq futures gain 0.8%. In Europe, political uncertainty in France weighs on sentiment, leaving EUROSTOXX 50 futures down 0.4%, DAX futures off 0.3% and FTSE futures flat, while the euro eases 0.2% to $1.1212 near last week's 16-month low of $1.1113.

The dollar dips 0.1% against the yen to 157.75, remaining in a narrow range this month as the threat of Japanese intervention keeps speculative sellers cautious. In commodities, gold benefits from lower yields and rises 0.4% to $4,181 an ounce.

Our earlier article on the mounting strains in U.S. AI data-center buildouts explained that higher financing costs, construction delays, and power constraints are increasingly challenging the sector’s expansion plans. It also highlighted how only a limited share of announced projects appears credible, raising concerns that developers may struggle to deliver capacity on time and convert heavy upfront investment into sustainable returns.

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