Markets across Asia took a beating on Tuesday. Asian stocks AI jitters spread quickly as investors questioned how long the artificial intelligence boom can keep powering profits, with a widening Middle East conflict adding to the gloom just before US bank earnings.
What happened
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.4% to a two-month low. South Korea’s tech-heavy KOSPI sank about 6%, which briefly halted program trading. Japan’s Nikkei dropped 2.6% and Taiwan lost 2%.
The trigger came overnight, when US chipmakers slid on reports of rapid progress by Chinese memory-chip maker CXMT. Analysts said the worry is less about AI demand and more about how profits get shared if Chinese rivals close the technology gap.
Oil, dollar and bank earnings
Brent crude traded near $106 a barrel, and the US dollar stayed close to an 18-month high. Investors are now looking at results from big US banks, including JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo, to see how higher Treasury yields are affecting lending and dealmaking. US inflation data is due Wednesday. Traders see roughly an 81% chance that the Federal Reserve holds rates steady this month.
The African angle
You may not own a chip stock, but this still reaches you. A strong dollar makes imports and debt repayments pricier for countries such as Nigeria, Kenya, Ghana and Egypt. High oil prices lift fuel costs at the pump, even for producers who benefit from higher export revenue. Global risk-off moods also tend to push investors away from African bonds and currencies.
When Seoul sneezes, African markets can catch a cold.
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