Tech Jitters, Gold Retreat Rattle Asian Markets as Geopolitical Tensions Simmer
Asian markets stumbled into the weekend, with a wave of selling hitting technology shares and precious metals, as investors grappled with the sustainability of the artificial intelligence spending spree and shifting geopolitical winds.
The trading week has been a turbulent one, buffeted by a cocktail of concerns: a weakening US dollar, renewed tariff threats from Washington, the looming specter of a US government shutdown, and escalating rhetoric between the US and Iran. While robust earnings from tech giants like Meta and Samsung had initially provided a buffer, sentiment soured sharply on Thursday following Microsoft's announcement of a massive surge in capital expenditure for AI infrastructure. The move reignited fears that the road to profitability for such vast investments may be longer than anticipated, prompting a reassessment of stretched valuations in the sector.
"Microsoft's plunge was a reality check for the market," noted Rodrigo Catril, a senior strategist at National Australia Bank. "The focus has abruptly shifted from the promise of AI to the practical costs and timeline for returns, particularly in cloud growth. It's a sign that the 'growth at any cost' narrative is being challenged."
Wall Street's negative lead carried into Asian hours. Hong Kong's Hang Seng and Shanghai's Composite each fell more than 1%. Tokyo's Nikkei 225, Sydney, Singapore, Taipei, and Manila also closed lower. Seoul managed modest gains. Jakarta's market showed tentative signs of stabilization after a two-day rout triggered by MSCI's warning over ownership concerns and its decision to postpone the inclusion of Indonesian stocks in its indexes.
In commodities, gold and silver retreated sharply from their record-breaking rallies. Gold traded around $5,200 an ounce, a significant drop from its peak above $5,595, while silver fell to $110 from over $121. The slight firming of the US dollar added pressure on dollar-priced metals. Meanwhile, oil prices retreated over 1%, paring Thursday's sharp gains, on hopes that US-Iran tensions might not escalate immediately. However, analysts warn the risk premium for crude remains elevated given the region's volatility.
Market Voices:
"This is a healthy correction, not a crisis. The AI thesis is intact, but markets are rightfully questioning the pace and cost of implementation. It separates the prudent from the profligate." — David Chen, Portfolio Manager at Horizon Capital in Singapore.
"The gold pullback was inevitable after that parabolic move. Long-term fundamentals for haven assets are still strong with all this global uncertainty, but short-term traders are taking profits." — Priya Sharma, Commodities Analyst at FinMark Advisory in Mumbai.
"It's sheer madness. We're watching tech giants burn cash on unproven AI dreams while inflation risks are ignored and the Middle East is a tinderbox. The market is doped on cheap money narratives and ignoring real-world risks. This isn't a 'healthy correction'—it's the first tremor before the quake." — Marcus Thorne, Independent Economic Commentator (posted on social media).
"Indonesia's MSCI situation is a stark reminder of the importance of regulatory clarity and market accessibility. Frontier market fears could trigger sustained foreign outflows if not addressed." — Anya Petrova, Head of Emerging Markets Research at Eurasia Consultancy.
Key figures at the close (GMT):
- Tokyo - Nikkei 225: DOWN 0.9% at 52,923.12
- Hong Kong - Hang Seng Index: DOWN 1.4% at 27,564.02
- Shanghai - Composite: DOWN 1.3% at 4,102.41
- West Texas Intermediate: DOWN 1.1% at $63.85 per barrel
- Brent North Sea Crude: DOWN 1.3% at $69.45 per barrel
- New York - Dow (previous close): UP 0.1% at 49,071.56
- London - FTSE 100 (previous close): UP 0.2% at 10,171.76