Asian stock markets tumbled on Monday as investors rushed to lock in gains from high-flying artificial intelligence (AI) stocks, amid growing concerns that valuations have run ahead of fundamentals and expectations of tighter US monetary policy.
The sell-off was led by South Korea’s KOSPI, which plunged 5% and extended losses to 13% from last week’s record high, while Japan’s Nikkei dropped nearly 4% and Taiwan’s benchmark index fell 3.9%. Nasdaq futures attempted a modest recovery after the Nasdaq slid 4.2% on Friday.
Reuters reported that sentiment turned sharply after semiconductor giant Broadcom issued a disappointing outlook last week, while a stronger-than-expected US jobs report prompted traders to price in the possibility of a Federal Reserve rate hike this year.
Market participants said heavily-owned technology counters, particularly AI-linked names, became a natural source of liquidity as investors reassessed risk following the shift in interest rate expectations.
The sell-off also coincided with rising geopolitical tensions in the Middle East. Brent crude surged 3.5% to US$96.45 a barrel after Israel said it had struck military targets in western and central Iran, adding to inflation concerns and clouding the outlook for global growth.
Analysts noted that while the long-term AI investment theme remains intact, the market may be entering a period where earnings delivery becomes more important than valuation expansion.
Attention this week will also turn to US inflation data and major central bank meetings, while investors closely monitor the highly anticipated listing of SpaceX, which is expected to be followed by potential public offerings from AI firms including Anthropic and OpenAI.
Some fund managers warned that the wave of large IPOs could divert capital away from existing market assets, adding further pressure to equities.
Reuters
