Most Asian stocks fell on Tuesday, extending recent losses as the technology sector saw no relief from concerns about inflated artificial intelligence valuations.
Caution also played a role ahead of a series of key US and regional economic readings, as well as concerns about a possible hawkish stance from the Bank of Japan later this week.
Regional markets were impacted by Wall Street's weak performance, which declined in overnight trading due to continued losses in the technology sector. Moderate guidance and large-scale spending plans from Broadcom Inc. and Oracle Group last week triggered the latest sell-off in the sector.
S&P 500 futures fell 0.4% by 4:35 a.m. Saudi time, with attention focused on U.S. non-farm payrolls and consumer price index data due this week.
Japanese stocks fell as the Bank of Japan meeting approached.
Japan’s Nikkei 225 and TOPIX indexes fell between 1% and 1.3% on Tuesday, weighed down by losses in the technology sector and broader sectors.
Markets have become more cautious towards Japan, awaiting potential hawkish signals from the Bank of Japan when it meets later this week.
Investors were on high alert for a possible interest rate hike, especially after Bank of Japan officials indicated they would consider raising interest rates amid recent spikes in inflation.
Prior to the Bank of Japan's decision, key Japanese consumer price index inflation data are also due to be released this week.
Japanese markets found little support from purchasing managers' index data which showed a slight improvement in manufacturing activity, while growth in services slowed slightly.
Asian technology declines amid ongoing AI concerns
Asian stock markets heavily weighted in technology remained the worst performers in the region, with South Korea's KOSPI and Hong Kong's Hang Seng both losing around 1.7%. Technology losses also significantly impacted Japan's Nikkei index, while shares of TSMC (TW:2330), the world's largest chipmaker, fell 1.4% in Taiwanese trading.
The technology sector continued to weaken amid growing questions about the massive AI valuations, especially after mixed signals from Oracle (NYSE:ORCL) and Broadcom Inc (NASDAQ:AVGO) last week raised concerns about excessive spending on AI data centers. US tech stocks have seen a broad decline since last week.
Other sectors besides technology also declined. China's Shanghai Shenzhen CSI 300 and Shanghai Composite indices fell by about 1% each, weighed down by concerns about the world's second-largest economy after a series of weak readings in November.
Renewed concerns about a property debt crisis, as major developer China Vanke (HK:2202) accelerates its debt restructuring, have also affected Chinese markets.
Australia’s ASX 200 index fell 0.4% after a private survey showed a sharp deterioration in consumer confidence in early December, due to concerns about rising inflation and stable interest rates.
Singapore’s Straits Times index fell 0.3%, while India’s Nifty 50 futures declined 0.2%.
