AI spending fears wipe 3.5% off Nasdaq 100 as Asian futures slide
Asian equity futures pointed lower on Monday after a technology rout in New York raised doubts about whether the artificial intelligence boom can sustain the spending behind it. Nasdaq 100 futures fell 3.5% on Friday and the index briefly entered a technical correction, while the Philadelphia Semiconductor Index dropped 7.2% and Intel Corp. suffered its steepest one-day fall in more than four decades.
The trigger was earnings from Alphabet Inc. and Amazon.com Inc., which showed the advertising, consumer and retail businesses funding a collective US$750 billion in AI spending by America's tech giants this year are beginning to slow. "The revelation that these hyperscalers are seeing a slowdown in their core businesses means that the big payoff that everyone has been saying will come eventually is getting pushed even further down the road," said Matt Maley of Miller Tabak.
Futures for Japan and South Korea pointed lower, while Australian futures were little changed. The S&P 500 slid 1.8% and breached its 100-day moving average. The Cboe Volatility Index touched its highest intraday level since April, and demand for put options protecting against further losses rose. Traders are bracing for US midterm elections this week and Nvidia Corp. earnings later in November.
In crypto, Binance recorded a net outflow of US$3.6 billion after restoring customer withdrawals on Sunday. The exchange said the flight of funds eased after an initial spike. Binance had frozen withdrawals following a US$6.3 billion hack while it investigated and stabilised the platform, and pledged to reimburse customers in full.
Some investors see the pullback as a buying opportunity. Morgan Stanley's Mike Wilson said several "clearing events" ahead could push stocks lower temporarily and create room to add exposure. "This looks more like a bullish rotation with a derating at its core than the beginning of a broad market deterioration," said Florian Ielpo, head of macro research at Lombard Odier Investment Management. In Asia, China's central bank and securities regulator were due to meet on Monday to discuss tools supporting the capital market, according to local media, after the CSI 300 Index fell into a bear market in October.
