Asian stocks fall as tech sell-off deepens; KOSPI tumbles over 3% ahead of Nvidia earnings

Asian shares extended Wall Street’s decline on Tuesday August 25, as investors pared holdings in technology stocks ahead of earnings that could indicate concerns over the artificial intelligence rally.

The MSCI Asia Pacific index dropped 0.4%, with Japanese and South Korean benchmarks among the biggest losers at early Asian trade. The Kospi tumbled 3.37% and the Nikkei 225 slid 0.93%, though the Topix showed a marginal gain of 0.015%. Hang Seng futures bucked the trend, rising 0.6%.

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The regional weakness followed a rout in chipmakers that pulled the Nasdaq 100 down almost 1% on Monday. Nvidia Corp’s shares fell for a seventh consecutive session, marking the stock’s longest losing run since 2022.

The chipmaker’s shares dropped a further 2.9% after it told customers that it would raise prices on AI systems due to ship early next year. US equity-index futures also edged lower in early Asian trading.

Investors said that the sell-off reflected growing concerns over whether heavy spending on artificial intelligence would deliver matching profits. Nvidia’s earnings, due Wednesday, were widely seen as a critical test of that confidence, with traders watching closely for signals on whether the recent weakness in chip stocks would persist.

Brent crude was little changed on Tuesday, hovering near $92 a barrel, after US Treasury Secretary Scott Bessent warned of economic penalties against any nation trading with Iran.

The benchmark had dropped more than 2% on Monday, breaking a six-day winning streak. West Texas Intermediate, meanwhile, rose 0.3% to $85.23 a barrel.

The retreat in energy prices helped lift US Treasuries on Monday, with the 10-year yield falling four basis points to 4.70%.Traders balanced escalating geopolitical risks against a heavy slate of economic data and corporate earnings due this week, with technology’s trajectory viewed as crucial for the broader market sentiment.

Yields remained elevated on persistent inflation and fiscal deficit concerns, and markets awaited clearer guidance from Fed Chair Kevin Warsh on the Federal Reserve’s likely path for the remainder of the year.

Treasuries also found support according to a CNBC report which suggested that the US Treasury Department could use its cash reserves to buy back older, higher-yielding securities to help contain borrowing costs.

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Bessent, however, declined to confirm any shift in debt management strategy during a speech on Monday, telling reporters at a press conference that the department had “not bought a single bond yet” when asked about expanding buybacks, according to Bloomberg.

Elsewhere, the Japanese yen held steady at 159.11 per dollar, while the offshore yuan was little changed at 6.7201 per dollar.