Asian stock markets declined on Tuesday, extending recent losses as technology shares remained under pressure amid concerns that artificial intelligence–related valuations may be overstretched.
Investor caution was also driven by an upcoming slate of major U.S. and regional economic data releases, along with growing expectations that the Bank of Japan could strike a hawkish tone later this week.
Regional markets followed a weak lead from Wall Street, where equities retreated overnight as losses in technology stocks persisted. The latest downturn in the sector was triggered by cautious outlooks and large spending plans from Broadcom and Oracle, which renewed worries about elevated AI investment costs.
U.S. stock futures were also lower, with S&P 500 futures down around 0.4% in late Asian trading. Attention is firmly on U.S. nonfarm payrolls and consumer price inflation data scheduled for release later this week.
Japanese stocks fall ahead of BOJ meeting
Japanese equities underperformed, with the Nikkei 225 and TOPIX indexes dropping between 1% and 1.3%. Losses were broad-based, led by weakness in technology shares.
Markets grew more cautious ahead of the Bank of Japan’s policy meeting, as investors positioned for the possibility of a shift toward tighter monetary policy. Recent comments from BOJ officials have raised expectations that interest rates could be increased in response to rising inflation.
Key Japanese consumer price inflation data is also due before the central bank announces its decision, adding to uncertainty in local markets.
Data showing a modest improvement in manufacturing activity offered little support, while growth in the services sector showed signs of cooling.
Asian tech stocks lead regional declines
Technology-heavy markets remained among the worst performers across Asia. South Korea’s KOSPI and Hong Kong’s Hang Seng index both fell around 1.7%, reflecting continued selling pressure in the tech sector.
In Taiwan, shares of TSMC, the world’s largest contract chipmaker, declined about 1.4%, adding to broader weakness across semiconductor stocks. Technology losses also weighed heavily on Japan’s equity markets.
Concerns around AI-driven valuations persisted after last week’s mixed signals from Oracle and Broadcom, which fueled doubts over the sustainability of heavy spending on AI data centers. U.S. technology stocks have declined steadily since last week.
Broader markets retreat across the region
Losses extended beyond the technology sector. China’s CSI 300 and Shanghai Composite indexes both fell roughly 1%, pressured by ongoing concerns about economic growth following a series of weak data releases in November.
Chinese equities were also weighed down by renewed fears surrounding the property sector, as major developer China Vanke moves to restructure its debt, reviving concerns of a broader real estate debt crisis.
Australian shares also weakened, with the ASX 200 falling 0.4% after a private survey showed a sharp deterioration in consumer sentiment in early December. Rising inflation and steady interest rates were cited as key concerns.
Elsewhere, Singapore’s Straits Times index slipped 0.3%, while futures linked to India’s Nifty 50 index edged 0.2% lower.
