Asian Markets Tumble Amid Global Tech Sell-Off and AI Investment Jitters
Asian stock markets experienced a sharp decline on Friday, as a prolonged sell-off in US technology stocks continued to dampen investor sentiment worldwide. The downturn was driven by growing apprehension over massive spending on artificial intelligence and uncertainty regarding when these substantial investments will begin to yield returns.
Regional Market Performance Shows Mixed Results
In Hong Kong, the Hang Seng Index dropped significantly, falling 304 points or 1.13% as of 10:20 am IST. South Korea's Kospi extended its losing streak into a second consecutive day, slipping 2% to settle at 5,057. However, not all markets followed the downward trend. Mainland China's Shanghai Composite edged higher by 0.1%, while the Shenzhen Component Index gained 0.6%. Japan's Nikkei 225 also managed to climb, adding 175 points or 0.33%.
Sell-Off Extends Beyond Equities to Multiple Asset Classes
The market turbulence was not confined to equities alone. The downturn rippled across various asset classes, severely impacting precious metals and cryptocurrencies. Silver faced another brutal session, plunging approximately 18% at one point before recovering to trade near $70 per ounce, marking its lowest level since December. Just a week earlier, the metal had been trading above $121. Gold also declined, shedding about 2% to sit just under $4,800, compared to its recent peak of $5,595 last Thursday.
Cryptocurrencies were caught in the broader sell-off as well. Bitcoin fell to its weakest level since October, narrowly avoiding a drop below $60,000. This decline erased all gains linked to expectations of more crypto-friendly policies under the Trump administration. The digital currency has now plummeted more than 50% from its record high above $126,000 reached in October.
AI Startup Announcement Adds to Market Anxiety
Adding to investor concerns was a significant announcement from AI startup Anthropic, the creator of the Claude chatbot. The company unveiled a new tool capable of replacing multiple software functions, including applications used in legal services and data marketing. This development intensified worries about the disruptive potential of AI and the timeline for returns on heavy investments in the sector.
US Economic Data and Market Performance Weigh Heavily
US markets set a negative tone, closing lower for a third consecutive session on Thursday. All three major Wall Street indexes recorded substantial losses, with the Nasdaq Composite suffering the steepest decline. The tech-heavy index has now registered its worst three-day performance since the tariff-driven market turmoil in April during Trump's presidency.
Economic data from the United States added further pressure to global markets. Monthly job openings fell to their lowest level since 2020, while companies announced the highest number of job cuts for January since the global financial crisis in 2009. These figures intensified worries about the broader health of the US economy.
External Factors Influencing Market Movements
The recent slump in precious metals followed a surge in the US dollar last weekend, triggered by Trump's appointment of a relatively hawkish figure to lead the Federal Reserve, coupled with easing geopolitical tensions. These factors contributed to the downward pressure on commodities and risk assets.
Corporate Developments Impact Mining Sector
In corporate news, Rio Tinto shares declined after the British-Australian mining giant announced it would abandon merger talks with Switzerland-based Glencore. The proposed tie-up would have created the world's largest mining company, valued at approximately $260 billion. Rio Tinto fell more than 2% in Sydney trading, while its London-listed shares dropped over 1%.
The global market sell-off highlights the interconnected nature of modern financial systems, where concerns in one region or sector can quickly spread across borders and asset classes. Investors remain cautious as they navigate uncertainties surrounding AI investments, economic indicators, and geopolitical developments.
