Asian stocks traded flat-to-lower on Tuesday, led by a sharp decline in Japanese markets as chipmaking stocks took a hit. Concerns emerged over DeepSeek’s new AI model, which rivals advanced AI technologies like ChatGPT but operates on older hardware, raising doubts about the demand for expensive AI chips and infrastructure.
Japan’s Nikkei 225 index dropped nearly 1%, with major chipmakers Advantest Corp. and Tokyo Electron Ltd. sliding up to 10% and 4%, respectively. Tech giant SoftBank Group also fell 4.7%, while the TOPIX index showed minor gains.
China and South Korea markets remained closed for the Lunar New Year, leaving trading volumes muted. Hong Kong’s Hang Seng index edged up 0.2%, supported by gains in tech heavyweights like Baidu, Tencent, and Alibaba, which rose between 1% and 5%, reflecting optimism about China’s growing AI capabilities.
The sell-off in chip stocks followed a weak lead from Wall Street, where the NASDAQ Composite slumped over 3%, fueled by a $600 billion market value loss in NVIDIA. However, U.S. futures stabilized during Asian trading.
Australia’s ASX 200 remained steady ahead of inflation data expected on Wednesday. The report could shape expectations for potential interest rate cuts by the Reserve Bank of Australia. Still, persistently high inflation raises doubts about imminent rate adjustments.
Meanwhile, Indian stock futures pointed to a recovery after the Nifty 50 index hit a seven-month low on Monday. Investors also await key U.S. tech earnings and the Federal Reserve's interest rate decision this week.
The market sentiment remains cautious, influenced by global trends and regional holidays, as investors assess the impact of AI advancements on chip demand and inflation data on monetary policies.


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