HONG KONG, Oct 22 – Asian stock markets tumbled on Thursday, as renewed concerns about the cost of artificial intelligence investment collided with rising geopolitical tensions in the Middle East, prompting investors to reduce exposure to riskier assets. Technology shares led the decline across major regional markets, while higher oil prices added to concerns about inflation, energy supplies and the outlook for global economic growth.
The broad selloff came despite encouraging earnings announcements from major U.S. technology companies, including SpaceX and Meta Platforms. Although their latest results offered some reassurance about the commercial potential of artificial intelligence, investors in Asia remained concerned about the enormous sums companies are committing to AI infrastructure and whether those investments will generate sufficient returns.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.8%, reaching its lowest level in almost three months. The index was also heading toward its fourth consecutive weekly decline, reflecting persistent pressure on regional equities as investors reassessed technology valuations and the risks surrounding the global economic outlook.
Japan’s Nikkei 225 reversed earlier gains to trade 2% lower, while South Korea’s benchmark index dropped more than 4%. China’s CSI 300, which tracks major companies listed in Shanghai and Shenzhen, declined 2%, bringing it close to entering a technical bear market. Hong Kong’s Hang Seng Index fell more than 3%, highlighting the breadth of the selling across Asia.
Technology companies were among the hardest hit as investors continued to question whether the rapid expansion of artificial intelligence will translate into profits that justify the industry’s growing capital requirements.
Japan’s Tokyo Electron, a major supplier of semiconductor manufacturing equipment, lost more than 6%. South Korea’s SK Hynix fell 5.7%, while Samsung Electronics declined 4.2%. Both companies are important players in the global semiconductor industry, which has attracted substantial investment as technology firms race to develop and deploy advanced AI systems.
In Hong Kong, Alibaba shares plunged 6.5%, adding to pressure on the market’s technology sector. The declines suggested that investors were becoming increasingly cautious about companies linked to the AI boom, even as demand for advanced computing capacity continues to support expectations for long-term growth.
The weakness extended beyond Asia. Futures tracking the Euro Stoxx 50, a benchmark for major companies across the eurozone, fell 0.9% in early European trading. U.S. S&P 500 futures were down 0.8%, indicating that investors were approaching the next trading session on Wall Street with greater caution.
The downturn followed a comparatively positive session in the United States, where the technology-heavy Nasdaq Composite helped major indexes finish slightly higher overnight. Results from SpaceX and Meta had initially encouraged investors by suggesting that substantial investments in artificial intelligence could support stronger business performance.
SpaceX reported its first profit as a publicly traded company, while Meta announced third-quarter revenue that exceeded market expectations. The results offered some evidence that companies making large investments in AI-related technologies are beginning to generate meaningful financial returns.
However, the positive reaction did not last as investors in Asian markets turned their attention to the financial commitments required to maintain that growth.
Meta’s proposal to issue a new class of non-voting Class C shares revived questions about its plans for financing future investments. The company’s expanding AI ambitions have required substantial spending on computing infrastructure, data centers and other resources needed to develop and operate advanced systems.
Investors are increasingly focused on the balance between that spending and the profits companies can ultimately deliver. Strong revenue figures may demonstrate continued demand for technology services, but they do not necessarily resolve concerns about the long-term cost of competing in the AI market.
Kyle Rodda, senior financial market analyst at Capital.com, said investors were still working through the latest earnings results amid a crowded set of economic and political developments.
The current earnings season is entering a more significant phase, with companies across multiple industries preparing to report their financial performance. At the same time, investors must consider an upcoming Federal Reserve decision, geopolitical uncertainty and the approaching U.S. midterm elections, Rodda said.
Those overlapping risks have made it more difficult for markets to settle on a clear direction, particularly as investors weigh the possibility that corporate spending could remain elevated even if economic conditions become less favorable.
Developments in the Middle East added another source of uncertainty on Thursday, with oil prices climbing as concerns about the potential expansion of regional hostilities intensified.
Brent crude futures rose more than 2% to $111.03 a barrel, approaching a five-month high. The increase followed further Houthi attacks in Saudi Arabia, raising concerns that the conflict could spread and disrupt energy production or transportation routes across the region.
The latest escalation has put energy markets on alert because the Middle East remains central to global oil supplies. Any disruption affecting major producers, export facilities or shipping routes could tighten supplies and push prices higher, creating additional pressure on countries and businesses that depend heavily on imported energy.
Higher crude prices also complicate the outlook for inflation. If energy costs remain elevated, transportation, manufacturing and other operating expenses could increase, potentially forcing businesses to raise prices. For central banks, persistent energy-driven inflation could make decisions about interest rates more difficult, particularly if economic growth begins to weaken.
The combination of geopolitical uncertainty and concerns about technology spending encouraged investors to seek safer assets. U.S. Treasury yields declined as demand for government bonds increased.
The yield on the benchmark 10-year U.S. Treasury note fell by nearly six basis points to 5.0857%. The 30-year Treasury yield touched a one-week low of 5.3850%. Bond yields move inversely to prices, meaning that rising demand for existing bonds generally pushes their yields lower.
European debt markets showed a different source of investor concern. French government bonds remained under pressure after the country’s 10-year borrowing costs climbed above 5%. Investors are watching whether the French government can contain social unrest and bring public spending under control, as concerns about fiscal discipline continue to influence the country’s borrowing costs.
Currency movements were relatively modest compared with the sharp declines in regional equities. The U.S. dollar index, which measures the greenback against a basket of major currencies, slipped to 101.57. The euro traded little changed at $1.1242.
The Japanese yen strengthened slightly to 157.55 per dollar after Bank of Japan Deputy Governor Ryozo Himino signaled that he remained prepared to raise borrowing costs. His remarks kept attention on the possibility of further monetary tightening in Japan, although the yen’s movement remained limited amid broader market uncertainty.
In South Korea, the won was little changed at 1,324 per dollar after the Bank of Korea left its benchmark interest rate unchanged at 3.00% on Thursday. The decision followed two consecutive rate increases, suggesting that policymakers were assessing the effects of previous tightening measures before making another move.
Precious metals and cryptocurrencies also weakened during the session. Gold slipped to $4,067.50 an ounce, while Bitcoin fell 2.2% to $82,771.05. Ether declined by a similar 2.2% to $2,436.30.
The declines across equities and digital assets underscored the cautious mood among investors, although movements in individual markets reflected different pressures. Technology shares faced questions about future profitability, oil prices responded to geopolitical developments, and government bonds attracted demand as investors sought protection against uncertainty.
For Asian markets, the immediate challenge is whether corporate earnings can provide a convincing counterweight to rising costs and geopolitical risks. SpaceX’s first reported profit as a public company and Meta’s stronger-than-expected revenue offered encouraging signals, but neither announcement was sufficient to prevent a broad regional selloff.
Investors will now be watching further earnings reports, central bank decisions and developments in the Middle East for clearer indications of where markets are heading. Until companies provide stronger evidence that AI spending can deliver sustainable returns, and tensions in the Gulf show signs of easing, technology shares and other risk-sensitive assets could remain vulnerable to further volatility.