Asian stock markets fell on Monday, October 19, as concerns over the enormous cost of artificial intelligence (AI) investments weighed on investor confidence ahead of a busy week of corporate earnings. However, declining oil prices helped support US stock futures and government bonds, limiting broader market losses.
Japan’s Nikkei 225 dropped 2.0% after losing 5.4% the previous week, while South Korea’s stock market declined 1.6% following a weekly slump of more than 14%. MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.3%, reflecting continued pressure on technology-related investments.
Investors are increasingly questioning whether the revenue generated by AI will justify the massive spending required to build data centres, computing infrastructure and other technology facilities. Rising borrowing costs and widening corporate credit spreads have added to concerns about the financial sustainability of the AI investment boom.
The Philadelphia Semiconductor Index fell 11.4% last week, marking its longest losing streak since 2008 and highlighting the pressure facing chipmakers as investors reassess the sector’s growth prospects.
Meanwhile, oil prices declined after US President Donald Trump indicated that some sanctions on Russia could be waived, although he later said a final decision had not been made. Brent crude futures fell 1.6% to US$108.06 a barrel, while US crude futures slipped 0.7% to US$100.70.
The drop in oil prices provided some relief to financial markets, helping S&P 500 futures rise 0.5% and Nasdaq futures gain 0.8%. Lower oil prices can ease inflationary pressures and reduce concerns about energy costs, although geopolitical uncertainty continues to complicate the outlook.
Tensions remained elevated after Iran reported that another tanker had struck a mine in the Strait of Hormuz, a strategically important shipping route for global energy supplies. Against this backdrop, investors moved towards safer assets, extending a rally in government bonds. The yield on 10-year US Treasury notes fell three basis points to 5.0645%.
Market attention is now turning to a series of major corporate earnings reports, including results from Meta, Tesla, Lam Research and Texas Instruments. Netflix, Procter & Gamble, General Motors and GE Aerospace are also scheduled to report, giving investors a broader picture of corporate performance across technology and traditional industries.
Meta is among five major AI infrastructure investors whose combined capital expenditure is expected to reach approximately US$1.2 trillion next year, according to Goldman Sachs estimates. The scale of planned spending has intensified scrutiny over whether future AI revenues can deliver sufficient returns.
In Europe, political uncertainty following unrest in France weighed on market sentiment. EURO STOXX 50 futures fell 0.4%, while Germany’s DAX futures declined 0.3%. The euro weakened 0.2% to US$1.1212, approaching its recent 16-month low.
Gold prices moved higher as falling bond yields improved the appeal of the non-yielding precious metal, with gold rising 0.4% to US$4,181 an ounce.
With technology earnings, AI investment plans, energy prices and geopolitical risks all in focus, investors face a volatile week as they weigh the prospects for corporate growth against rising financing costs and uncertainty across global markets.
