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Asian technology stocks fell sharply on Monday as rising bond yields and renewed concerns about the sustainability of the artificial intelligence rally pushed investors away from high-growth chipmakers.
South Korea’s tech-heavy KOSPI dropped 3.1%, leading losses across the region, while Japan’s Nikkei 225 declined 1.1%. Weakness extended to U.S. markets, with Nasdaq 100 futures falling 1.2% compared with a 0.4% decline in S&P 500 futures.
The selloff intensified as U.S. Treasury yields approached 5%. Markets are pricing an 86% probability that the Federal Reserve will raise interest rates by 25 basis points this week following hotter-than-expected U.S. inflation data. Higher interest rates typically pressure technology stocks by reducing the present value of their expected future earnings.
AI and semiconductor stocks were among the biggest casualties. Investors have become increasingly cautious following substantial gains in AI-related shares, while Anthropic CEO Dario Amodei’s call to slow the development of increasingly powerful AI models on safety grounds added to concerns surrounding the sector.
In South Korea, SK Hynix fell 4.3%, Samsung Electronics declined 2.5%, and LG Innotek lost 3.1%. Samsung and SK Hynix are major suppliers of high-bandwidth memory chips used in AI processors, leaving the Korean market particularly exposed to changes in AI investor sentiment.
Japanese technology shares also weakened. Kioxia plunged 7.1%, Murata Manufacturing dropped 3.6%, and TDK edged 0.1% lower. Sony bucked the broader trend with a 3.1% gain.
Pressure on Asian stocks was compounded by oil prices climbing above $100 per barrel following renewed attacks involving Saudi energy infrastructure and Gulf shipping. Higher crude prices have fueled concerns that inflation could remain elevated, potentially forcing central banks to maintain tighter monetary policy.
Investors are now focused on the Federal Reserve’s policy decision on Wednesday and the Bank of Japan meeting on Friday. Expectations for a BOJ rate hike have supported the yen while adding another headwind for Japanese equities.
