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July 29, 2026 - 07:01
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(Bloomberg) — Asian stocks fell for a second day as investors rotated out of chip shares amid growing skepticism over whether massive AI spending will deliver sufficient returns. Oil climbed after fighting erupted in the Middle East.South Korea’s equity benchmark tumbled 9%, adding to Tuesday’s 11% drop and putting the gauge on track for a record two-day decline. Shares of chip major SK Hynix Inc. plunged as much as 20% even after a 557% surge in its quarterly profit missed lofty estimates. Those of rival Samsung Electronics Co., which is due to report Thursday, slid as much as 14%.“Given the weight of SK Hynix and Samsung on the Kospi, there’s nowhere to hide when they fall together,” said Josh Gilbert, lead analyst for Asia Pacific and the Middle East at Etoro Ltd.The selloff in Korea sent the broader MSCI Asia Pacific Index down 1.5%, to the lowest level since mid April. Futures contracts for the Nasdaq 100 Index fell 0.7%. The tech-heavy gauge has fallen for five consecutive days — the longest losing streak this year. European shares were also set for a weak open.Risk sentiment was also hurt by rising oil prices. Brent jumped almost 4% to trade above $87 a barrel, rebounding from its biggest three-day decline since April 2020. That came after the US said it intercepted an Iranian “surprise attack” on its troops and struck back at the Islamic Republic. A Bloomberg gauge of the dollar weakened.The renewed fighting in the Middle East shifted focus back to the Strait of Hormuz, with the risk of disruptions to oil flows threatening to fuel inflation just as markets awaited the Federal Reserve’s policy decision on Wednesday. That adds another layer of uncertainty for investors who are already rotating away from technology stocks. The sector has suffered in recent days also on account of concerns related to overcrowding and circular deals.Meanwhile, President Donald Trump welcomed Israeli Prime Minister Benjamin Netanyahu to the White House Tuesday.“We remain cautious of any potential deal that does not concretely settle the Hormuz topic, given disagreements over management of the Strait led to Iranian aggression and an early failure of the prior MOU,” said Ryan McKay, senior commodity strategist at TD Securities.AI SpendingAI spending by the world’s biggest technology companies has reignited concerns about over-investment as they seek to ride a multiyear boom in the sector. SK Hynix has earmarked at least $31 billion in capital spending this year, a record outlay. That’s after Alphabet Inc. last week raised its capital spending forecast to as much as $205 billion this year.Those worries have dominated price action in stock markets, with shares of AI bellwethers dropping even after the companies beat earnings estimates.As investors sell tech, subgauges of consumer discretionary, finance and energy stocks are the top performers in Asia in the past month, according to data compiled by Bloomberg.A gauge of chipmakers slipped 4.5% on Wall Street Tuesday, with the selloff also putting the Nasdaq 100 Index on the brink of a technical correction.“Concerns about excessive optimism around AI initially triggered the correction in semiconductor stocks,” said Rajeev De Mello, global macro portfolio manager at Gama Asset Management SA. “But the latest acceleration lower looks less driven by fundamentals and more by positioning, forced selling and investor psychology.”The moves create a challenging backdrop ahead of earnings from the largest US tech companies. Microsoft Corp. and Meta Platforms Inc. report results on Wednesday, followed by Apple Inc. and Amazon.com Inc. a day later.Elsewhere, traders are also focused on the Fed. The central bank is expected to keep interest rates on hold when it concludes its two-day meeting, but market participants are eyeing the possibility of a surprise hike as patience with high inflation wears thin. The Bank of England will announce its decision on Thursday and the Bank of Japan Friday.Analysts at JPMorgan Chase & Co. said the probability of a rate hike is likely less than the roughly 30% chance currently priced, as “inflation, while elevated, does not appear to at-risk of an upside explosion.” They assign a 50% chance to a “hawkish hold,” as the central bank will want to stay vigilant even though recent energy prices suggest disinflation may be ahead.Corporate News:UBS Group AG announced a new $3 billion share buyback program to run until mid-2027, giving investors more clarity on payouts amid ongoing uncertainty over the bank’s future capital requirements. Standard Chartered Plc announced a $1 billion share buyback as it reported second-quarter earnings that beat expectations despite China introducing new restrictions on cross-border accounts. Some of the main moves in markets:StocksS&P 500 futures fell 0.2% as of 2 p.m. Tokyo time Japan’s Topix fell 0.2% Australia’s S&P/ASX 200 rose 1.1% Hong Kong’s Hang Seng rose 1.4% The Shanghai Composite fell 0.6% Euro Stoxx 50 futures fell 0.5% CurrenciesThe Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1401 The Japanese yen rose 0.3% to 163.43 per dollar The offshore yuan was little changed at 6.7710 per dollar CryptocurrenciesBitcoin was little changed at $63,885.41 Ether fell 0.7% to $1,902.97 BondsThe yield on 10-year Treasuries was little changed at 4.61% Japan’s 10-year yield declined two basis points to 2.755% Australia’s 10-year yield declined six basis points to 4.90% CommoditiesWest Texas Intermediate crude rose 3.5% to $82.06 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.–With assistance from Youkyung Lee, Momoka Yokoyama, Kanoko Matsuyama and Elaine Lai.©2026 Bloomberg L.P.
