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🇫🇷 France /Economy & Trade

Asian stocks tumble as AI doubts resurface

From Le Figaro · () French

Translated from French, summarized and contextualized by DistantNews.

At a glance

News From a news agency Context piece
  • Asian stock markets, including Tokyo and Seoul, fell sharply due to renewed concerns about artificial intelligence (AI) profitability.
  • Investors are taking profits after a recent rebound in AI-related stocks, leading to a reassessment of valuations.
  • Concerns persist regarding the volume of capital for AI, competition from Chinese firms, and which companies will benefit economically.

Asian stock markets stumbled on Thursday, with Tokyo and Seoul indices experiencing significant drops as investor worries about artificial intelligence (AI) resurfaced. The Nikkei in Tokyo retreated 1.95% to 65,007 points, while the broader Topix index fell 0.45% to 4,027 points. In Seoul, the Kospi index plummeted 4.74% to 6,285 points.

The tech stock rally on Wall Street over the past week has been spectacular... Consequently, a pullback at this stage would be entirely normal.

— Kathleen Brooks, XTB analystExplaining the market's reaction to the recent tech stock rally.

This downturn follows a period of renewed profit-taking on technology stocks. Investors are reassessing the high valuations of AI-related companies after a dramatic rebound since last month's sharp decline. The market is seeking stabilization in the short term, with a close watch on corporate earnings reports.

Analysts suggest this correction is a normal market reaction after a substantial rally. Speculative funds had previously helped boost tech shares, but fundamental questions remain unanswered. These include the ultimate volume of capital to be deployed in AI, the competitive challenge posed by Chinese AI firms, and which specific companies will capture the economic benefits.

A correction is expected after the recent significant rebound: the stock market should seek to stabilize in the short term, while closely monitoring the evolution of corporate results.

— Monex Securities expertsCommenting on the expected market behavior and key factors to watch.

Meanwhile, oil prices showed volatility, fluctuating in early Asian trading. The WTI crude gained 0.84% to $75.85 a barrel, and Brent crude rose 0.87% to $80.14 a barrel. This nervousness in the oil market is linked to developments in the Middle East, including Iran's reported agreement with Oman on a new transit route in the Strait of Hormuz, a critical chokepoint for global oil transport.

The intervention of hedge funds had helped to boost titles after their July collapse, but this has done little to resolve the fundamental questions: what volume of capital will ultimately be deployed, the competitive challenge posed by Chinese AI companies, which companies will capture the economic benefits.

— Rajeev de Mello, Gama Asset Management managerHighlighting the underlying issues that persist despite the market rebound.
DistantNews Editorial

Originally published by Le Figaro in French. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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