Asian markets extend global retreat as tech worries build

Asian equities sank again Friday as a tech rout that battered Wall Street for the third day in a row showed no sign of letting up amid growing unease about the hundreds of billions splashed out on artificial intelligence.

The selling continued to be felt across assets, with silver taking another beating and bitcoin wiping out all the gains built up since Donald Trump’s US election win.

January’s bristling rally has given way to caution this month as traders grow concerned about stretched valuations in the tech arena and the wisdom of the investments pumped into AI amid questions about when they will see returns.

Those fears have increased during the earnings season as big-name firms unveiled eye-watering levels of planned spending for the sector: between them Amazon and Google parent Alphabet have outlined around $385 billion in possible outlays.

The panic has been compounded after AI startup Anthropic — which created the Claude chatbot — unveiled a tool that could replace numerous software tools including for legal work and data marketing.

All three main indexes on Wall Street saw hefty losses Thursday, with the Nasdaq leading the way down again meaning it has suffered its worst three-day period since Trump’s tariff-induced April meltdown.

And the gloom carried into Asia, where Seoul — which has led the region’s rally thanks to its heavy tech weighting — lost around five percent at one point.

Hong Kong, Shanghai, Singapore, Taipei and Manila were also deep in the red, though Tokyo edged up.

“When AI starts to replicate tasks traditionally performed by professionals — drafting, analysing, coding, reviewing — it naturally raises questions about the long-term pricing power of certain software products,” wrote Saxo Markets’ Charu Chanana.

“Investors are no longer impressed simply by the presence of AI features.

“This is why the pressure has shown up most clearly in (Software as a Service): it’s where the market is first forced to debate what AI will replace, who retains pricing power, and who absorbs the costs of adoption.”

– Bitcoin in firing line –

Adding to the selling was data showing US monthly job openings hitting the lowest since 2020, while firms announced the most January job cuts since 2009 during the global financial crisis.

That ramped up concerns about the US economy.

Precious metals were once again on the receiving end of the selling juggernaut, with silver losing around 18 percent at one point before recovering to sit around $70 an ounce — its lowest since December — having topped out above $121 just a week ago.