Asian equities fell Monday morning, as mounting artificial-intelligence funding concerns outweighed relief in the energy markets as oil declined.
Weakness in stocks across the region tracked Wall Street's losses on Friday, hammered by AI infrastructure stocks. The Philadelphia Semiconductor Index ended 3.8% on Friday while the tech-heavy Nasdaq recorded its weakest week since June.
While data-center provider Coreweave's share and bond selloff brought credit risks into focus, the selloff has spread across the AI value chain, affecting even companies with limited financing needs, Tiger Brokers' James Ooi said in a note, adding that investors are rotating toward defensive sectors.
"This suggests sentiment may be overtaking fundamentals," Ooi said.
While fresh earnings reports from key AI supply-chain players ASML and Taiwan Semiconductor Manufacturing Co. last week showed that AI demand remains robust, analysts think debt-laden AI financing and the timeline for actual economic returns have reached a critical tipping point.
Japan's Nikkei Stock Average shed 1.2% and South Korea's Kospi was down 0.8%. Taiwan's Taiex declined 1.5%. The Hong Kong market was closed for a holiday.
China's Shanghai Composite Index was 0.55% lower as investors digested third-quarter economic data. The country's gross domestic product grew 4.5% from the same period last year, slightly higher than market expectations for 4.4% growth.
Oil prices retreated after surging to a five-month high on Friday. President Trump on Friday night halted implementation of most of the sanctions that were to be imposed on Russia, as part of a bid to end the war in Ukraine and keep energy prices under control ahead of the midterm elections.
Meanwhile, Russian President Vladimir Putin has proposed that he, Trump and Chinese leader Xi Jinping meet next month to talk about Ukraine in an attempt to negotiate an end to the conflict, The Wall Street Journal reported.
Front-month WTI crude oil futures were 0.7% lower at $100.71 per barrel, while front-month Brent crude oil futures were 1.7% lower at $108.00 a barrel.
However, oil's retreat could be brief as plans by the Group of 7 nations to accelerate releases of oil and diesel stockpiles have been dismissed as too late and already expected by the market, ANZ Research analysts said in a note.
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