Growing concerns over the outlook for artificial intelligence (AI) are rattling global markets, pressuring Asian equities on Monday while safe-haven assets like gold extend their gains.
On December 15, the MSCI Asia Pacific Index fell 0.7%, dragged down by Wall Street’s tech selloff on Friday. South Korea’s benchmark KOSPI, a poster child of this year’s AI investment frenzy, led the decline, opening 2.7% lower with Samsung Electronics dropping over 3%.
Australia’s S&P/ASX 200 slid 0.7%, while Japan’s Nikkei 225 opened weaker and extended losses beyond 1%.
The shift in sentiment drove flows into haven assets. Gold is poised for a fifth straight daily gain, with year-to-date returns exceeding 60%. Alongside silver—which has doubled this year—the metals are heading for their best annual performance since 1979. Spot gold rose 0.5% to $4,320/oz, while silver gained 0.9%.
Meanwhile, LME copper extended its rally, climbing over 1% to $11,659/ton.
Although U.S. equity futures edged higher on Monday, hinting at potential stabilization, AI bubble fears remain the dominant market theme. From Nvidia’s recent pullback to Oracle’s plunge after disclosing surging AI costs, skepticism around AI-related investments is mounting.
**Key Asian Asset Moves:** - Nikkei 225 opened 0.9% lower before widening losses to 1.4%. - KOSPI dropped 2.7% at open; Samsung Electronics fell over 3%. - Taiwan’s TAIEX declined 1.3% to 27,829.83. - S&P/ASX 200 dipped 0.7%. - FTSE China A50 futures slipped 0.33% early. - LME copper rose over 1% to $11,659/ton. - Spot gold up 0.5% at $4,320/oz; silver gained 0.9%.
**AI Bubble Fears Intensify, Tech Stocks Under Pressure** Global risk appetite is waning as doubts emerge over whether tech stocks—which propelled global indices to record highs—can sustain their lofty valuations and aggressive AI spending. Asian markets, which have outperformed this year, appear particularly vulnerable given the region’s pivotal role in manufacturing components underpinning the tech boom.
Nick Twidale, Chief Market Analyst at AT Global Markets in Sydney, noted Friday’s moves highlighted "the potential for an AI bubble burst in the near future." He added, "Despite trade concerns, Asian markets have seen strong growth this year driven by AI and tech. I expect significant pullbacks in today’s session."
Questions around AI investments—ranging from practical applications and soaring development costs to consumer willingness to pay—are shaping equity trajectories. Investors are debating whether to trim AI exposure preemptively or double down on the disruptive technology.
**Fed Policy Divergence Bolsters Gold** Amid equity turbulence, U.S. Treasuries stabilized Monday, with the 10-year yield flat at 4.18%. Internal Fed debates persist over the extent of 2026 policy easing.
Cleveland Fed President Beth Hammack favored keeping rates slightly restrictive to pressure inflation, while Chicago’s Austan Goolsbee projected more rate cuts than peers. These conflicting views have tempered trader bets on further U.S. monetary loosening, supporting non-yielding assets like gold.
**Focus Turns to Central Bank Meetings, Data** This week marks the final cluster of major 2025 central bank decisions, with the Bank of England and Bank of Japan in focus. Japan’s large manufacturers’ confidence hit a four-year high, bolstering expectations for a BOJ rate hike.
Upcoming global data—including New Zealand growth, European activity figures, and Canadian/UK inflation—will help gauge 2026 policy paths. In China, retail sales and industrial production will be closely watched.
Capital.com’s Kyle Rodda stated, "Amid fresh AI valuation worries, the ‘Santa Rally’ isn’t materializing." He cautioned that this week’s event risks could either spark a year-end rally or trigger deeper selloffs.
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