Asian markets slide as tech valuations worry investors

Key points:

• Stocks fall as investors await US economic data
• Japan’s PM Takaichi to meet BOJ governor as markets speculate on rates
• Fed rate-cut expectations decrease despite U.S. economic weakness

By Scott Murdoch

Asian stocks sagged to one-month lows on Tuesday with the heaviest selling in Japan and South Korea’s tech-driven markets as earnings at chipmaker Nvidia loom later in the week as a test for valuations across the sector.

Japan’s Nikkei NI225, down 3%, was headed for its largest one-day fall since April and FTSE Z1! and European futures FESX1! were both down more than 1%.

“It’s starting to feel like investor conviction at current levels is fading,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore.

“It’s less about a sharp catalyst and more about positioning fatigue, valuation sensitivity, and a growing sense that the rally needs a pause,” he said.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was down 1.8% to its lowest level since mid-October. South Korea’s KOSPI (.KS200) shed 3.3%, Australia’s S&P/ASX200 XJO fell almost 2% and Hong Kong’s Hang Seng Index lost 1.67%.

The weakness across Asia stocks tracked an extended selloff on Wall Street overnight, with markets braced for a flood of economic data releases.

“November has brought greater volatility to global equity markets. Unlike October, most major indices have stalled, failing to push on to new record highs,” said Besa Deda, chief economist at William Buck, the advisory firm in Sydney.

NVIDIA ANTICIPATED

Chipmaker Nvidia’s quarterly earnings on Wednesday are hotly anticipated as investors look for signs of weakening in a sector that has driven the stock market’s rally over recent months.

A basket of Japan’s top AI-related stocks tracked by BNP Paribas was down by 4.7% during the session on Tuesday, taking its monthly decline since the end of October to about 15%. The basket was up 130% from the start of the year until October.

“Many of the Asia technology companies are part of the broader global AI supply chain,” said Jason Lui, head of APAC Equity and Derivative Strategy, BNP Paribas.

“As investors are having closer analysis on the spending, the sustainability and magnitude of that spending, that will feed into more selective investing in the US and across Asia.”

In the foreign exchange market the safe havens of the dollar, yen and Swiss franc were bought. The Swiss franc USDCHF was just on the strong side of 0.80 per dollar. The dollar index DXY was flat at 99.5.

The yen USDJPY was about 0.15% higher at 155 per dollar, in some relief for Japanese authorities who have been verbally pushing back with increasing concern at yen weakness.

JGBs SLIDE

Japanese government bonds also slumped, sending some long-end yields to record highs, on worries about Prime Minister Sanae Takaichi’s ballooning spending plans.

Takaichi’s meeting with Bank of Japan governor Kazuo Ueda at 0630 GMT was being closely watched, in the first discussions to be held between the pair since the new leader was inaugurated last month

Ueda has signalled the chance of an interest rate hike as soon as next month. But Takaichi and her finance minister, Satsuki Katayama, have made clear their preference for rates to remain low until inflation durably meets the BOJ’s 2% target.

“My expectation is that another rate hike will be pushed into 2026. By the first quarter, the BOJ can wait for the outcome of more wage negotiations and it is a conservative organisation and they could continue to wait and see,” said Tai Hui, JPMorgan Asset Management’s chief market strategist for Asia.

Gold GOLD was down 0.87% to $4,008 an ounce while Brent crude futures BRN1! slipped 0.67% in the Asian session to $63.77 a barrel.