Asian equities fell on Monday, led by a 7.6% slide in South Korea’s Kospi and a 4.9% drop in Japan’s Nikkei, as investors reacted to a tech‑heavy sell‑off on Wall Street driven by worries over the economics of the AI boom. Analysts say the move reflects a reassessment of AI funding rather than a simple demand slowdown.
Asian stock indexes opened lower on Monday, with South Korea’s Kospi tumbling 7.6% and Japan’s Nikkei 225 slipping 4.9% after a tech‑heavy sell‑off on Wall Street reverberated across the region. The decline was tied to growing concerns that the massive capital inflows into artificial‑intelligence projects may be unsustainable, a view echoed by National Australia Bank’s Rodrigo Catril, who said the U.S. equity pull‑back “reflected a reassessment of the economics underpinning the AI investment boom rather than a simple downgrade to end‑demand.” (source 2)
In the United States, the broader market showed mixed signals. On Tuesday, the S&P 500 edged down less than 0.1% while the Dow Jones fell 0.3% and the Nasdaq slipped 0.2%, keeping the indexes close to their all‑time highs after the first wave of summer profit reports (source 1). By Thursday, however, the S&P 500 had rebounded 0.3% and the Dow surged 1.1%, helped by stronger‑than‑expected earnings from firms such as Marsh & McLennan and Kimberly‑Clark, even as AI‑related stocks continued to swing wildly (source 2).
Analysts note that the current earnings season is setting a high bar, with FactSet projecting nearly 30% profit growth for S&P 500 companies versus a year earlier. The pressure on AI stocks, combined with elevated inflation, bond‑market yields and geopolitical tensions, suggests that volatility may persist. Investors will be watching upcoming earnings and any shifts in AI funding dynamics for clues on whether the recent pull‑back is a temporary correction or the start of a broader market recalibration.