Asian stocks slid Tuesday, extending losses from overnight US futures, as mounting anxiety over a potential slowdown in artificial intelligence development offset an oil rally that pushed swap traders to price in near-certainty of a Federal Reserve interest-rate hike.
The MSCI Asia Pacific index dropped about 0.5%. South Korea's KOSPI fell 3.3%, leading regional declines, while Japan's Nikkei 225 slipped 0.6%. Hong Kong's Hang Seng edged up 0.2% and China's Shanghai Composite rose 0.2%, but China's CSI 300 fell 0.3%. Australia's S&P/ASX 200 was little changed at 8,741.40. New Zealand's NZX 50 gained 0.4% and Singapore's Straits Times rose 0.1%. Indian markets were closed for a public holiday.
US futures pointed to further weakness: the Nasdaq 100 futures fell 1.3% and the S&P 500 futures dropped 0.6%. Technology and hardware names bore the brunt of selling. SK Hynix fell 5%, Samsung Electronics lost 2.9%, and Japan's Kioxia plunged 6.8%. Murata Manufacturing declined 3.8%, Taiwan's Largan slumped 10%, and SoftBank Group fell as much as 13% in Tokyo. Chinese AI developer Z.AI dropped 7.5%.
The tech selloff followed remarks from several prominent AI leaders urging a more cautious pace of development. Anthropic CEO Dario Amodei called for the industry to slow the rollout of its most advanced models and said his company would introduce independent third-party evaluations. OpenAI CEO Sam Altman endorsed a similarly restrained approach and said OpenAI would not pursue an initial public offering this year. Elon Musk also voiced support for a more deliberate pace, though former president Donald Trump dismissed growing concerns, arguing that companies must continue advancing to compete with Chinese rivals.
Separately, Z.AI launched a roughly $5 billion fundraising through a share placement and convertible bonds, with new shares issued at a discount to the previous close to finance research, computing infrastructure, expansion and strategic investments. In unrelated corporate action, FleetPartners shares rose 12% as a bidding war developed for the vehicle-leasing company.
Oil prices added to inflation pressures, with Brent crude rising 2.7% to $107.51 a barrel, holding above $100. The rally came after Saudi Arabia shut a key pipeline following drone attacks and a planned meeting between Iran and Gulf states was postponed. Conflict around the Strait of Hormuz threatened to keep energy costs elevated, reinforcing market expectations of tighter monetary policy. Swap traders assigned a nearly 90% probability of a Federal Reserve rate increase on Wednesday.
Investors are also monitoring upcoming policy decisions from the Federal Reserve on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday.
