Asian Markets Slide Amid Tech, Oil Concerns

Kioxia tumbled more than 12 percent as Japan’s Nikkei 225 resumed after a holiday and immediately slid to 67,292.39. Tokyo Electron and Advantest were each off more than 6 percent. Tuesday’s Asian session opened sharply lower, technology shares leading the losses as they tracked the overnight chip selloff on Wall Street.

“A lot of it has to do with the chip selloff we saw on Wall Street overnight. That’s bleeding into the Asian region,” said Kyle Rodda, a senior analyst at Capital.com. Overnight in New York the Nasdaq had fallen 0.5 percent, dragged by chipmakers. SanDisk dropped 6 percent. Micron Technology shed 3.9 percent. Taiwan’s TAIEX slipped on a 1.8 percent drop in TSMC. From Tokyo’s reopen through early trade in Taipei, technology set the morning tape.

Hong Kong’s Hang Seng fell 0.9 percent to 24,046.21. The Shanghai Composite fell 0.8 percent to 3,766.18. MSCI’s Asia-Pacific ex-Japan index was down 2 percent in early trading. The U.S. dollar sat near an 18-month high. The euro last bought $1.1157. The yen stood at 158.50 per dollar. Cash was moving toward safety while growth names gave ground.

“When you add another jump in oil prices and some positioning ahead of inflation data and earnings, you have all the ingredients for a risk-off day in Asia,” Rodda said. Explosions hit Riyadh overnight. A Houthi official warned the United States of a “painful response” if it entered the war in Yemen. Brent crude futures stood at $105.9 per barrel, near a two-week high. Oil markets turned volatile as investors contended with supply risks from the attacks on Saudi Arabia and weighed a fragile Russia-Ukraine energy picture.

“Markets are rediscovering that geopolitics matters most when it feeds back into inflation,” said Charu Chanana, chief investment strategist at Saxo in Singapore. “The renewed jump in oil is keeping pressure on yields and taking some shine off expensive growth stocks, especially as the Russia-Ukraine energy truce looks fragile and West Asia supply risks remain live.” The U.S. 10-year Treasury yield fell 2.9 basis points to 5.214 percent in Asian hours, remaining close to the 24-year high of 5.364 percent reached the week before. Elevated energy prices fed inflation fears, propped the dollar, and stripped shine from expensive growth names. The morning’s slide was no longer only a hangover from overnight chips. Oil had given risk a second price.

Reports that China’s CXMT had made progress on technology to boost memory density hit Samsung Electronics and SK hynix at once. The firm was looking at releasing a new server-memory product based on the structure by the end of the year. Memory density is simply how much data a chip can hold in a given space; packing more into each server chip cuts the cost of the storage AI systems need. South Korea’s Kospi took the steepest fall in the region and closed at 5,979.19, the drop carrying the index below 6,000.

“China continues to narrow the competitive gap with US companies across AI models, humanoid robotics, memory and other parts of the technology supply chain,” said Chris Weston of Pepperstone. “Its ability to develop increasingly competitive products at lower costs is challenging established assumptions around market share, pricing power and the durability of margins.” Broadcom CEO Hock Tan publicly likened AI investor enthusiasm to gambling. Lower-cost denser server memory from a Chinese rival was the competitive shock that gutted those assumptions on share, pricing, and margins.

Third-quarter earnings season was opening with equities near record highs. Anthony Saglimbene, chief market strategist at Ameriprise Financial, left no doubt about the thin margin left. “The Q3 earnings season starts with stocks near record highs and little room for disappointment,” he said. “We believe for stocks to have an opportunity to grind higher from here, corporate America needs to turn in more A’s and B’s on their latest report cards and show they can maintain that momentum into year-end.” Investors fixed on U.S. bank results this week for a read on whether households were still paying bills, borrowing, and spending, and on what the surge in Treasury yields was doing to lending, dealmaking, and funding costs. Four of the six largest U.S. lenders—JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo—were set to report later in the day. Inflationary pressure from elevated energy prices and worries over ballooning government debt had already driven borrowing costs to multi-decade highs. The scale of corporate AI spending and those higher costs sat behind the valuation unease that had already shaken technology shares.

Brent crude futures later fell 1.1 percent to $105.52 a barrel. West Texas Intermediate dropped 1.2 percent to $92.66 per barrel. Both main contracts were down more than one percent Tuesday. Brent is a light, sweet petroleum grade used as a global price benchmark and traded as futures; West Texas Intermediate is the other principal commercial benchmark. Even after the pullback, Brent remained stuck above $100 and kept constant upward pressure on global inflation. One source had the MSCI Asia-Pacific index falling 0.9 percent and heading for its weakest close since mid-August. Currency levels into the session put the euro at $1.1171, the yen at 158.31 per dollar, and the pound at $1.3218, up from $1.3207. Traders positioned for this week’s U.S. consumer price index and for the bank prints due later in the day. The contracts had eased. They had not left the danger zone. Brent was still above one hundred as Asia’s screens stayed red.