Asian shares fell at the open after fresh anxiety over the impact of artificial intelligence on company profits roiled Wall Street, while uncertainty over tariffs added to traders' concerns.
Gauges in Japan, which returned after a holiday on Monday, edged lower, along with those in South Korea. Australian shares, however, opened higher, suggesting the bourse lacks technology stocks relative to peers. Markets in mainland China are poised to reopen after the Lunar New Year holiday period.
Treasuries and gold rallied in the US session on Monday as investors pared back risk, while Bitcoin slumped.
The S&P 500 slid 1%, with tech, delivery and payment shares hit as Citrini Research laid out the potential AI risks to various industries. International Business Machines Corp. tumbled 13% in its worst day since October 2000 as Anthropic said its Claude Code could help modernize COBOL, a programming language mainly run on IBM computers.
Amid lingering uncertainty over President Donald Trump's tariffs, concerns about AI-driven disruption are prompting traders to dump shares of any company seen at the slightest risk of being displaced. Those worries have also grown despite solid results from megacaps amid doubts over whether big investments in the technology will pay off soon.
Photo Credit: Bloomberg News
“The software selloff is a reminder of what can happen when momentum-driven sectors shift into reverse,” said Steve Sosnick at Interactive Brokers. “The broader, more important question is: How many sectors can go into reverse before they drag the broader market along with them?”
While software companies have been among the hardest hit, insurance brokers, private credit firms, cybersecurity and even real estate services stocks have all been caught up in the so-called AI scare trade.
In other corners of the market, the US 10-year yield fell five basis points to 4.03% on Monday, while the two-year dropped four basis points to around 3.44%. Bitcoin traded below $65,000. The dollar inched higher on Monday as haven currencies outperformed.
Gold extended its gains to a fifth day on Tuesday, trading close to $5,240 an ounce in a sign of defensive positioning. Silver hovered around $88 an ounce.
In other commodities, oil steadied as Trump said his preference was for a nuclear deal with Iran ahead of talks between the two nations this week. Copper faced pressure as traders gauged demand for the metal in China given US tariff uncertainty.
Questions over US tariffs added to the downbeat mood on Monday.
After the Supreme Court's decision Friday to nix Trump's “reciprocal” tariffs, the White House announced plans to replace the prior levies with a new, across-the-board 15% tariff on US imports. The European Union froze ratification of its US trade deal amid the uncertainty.
The US is readying a spate of additional national security investigations that would enable Trump to impose new tariffs, as the administration seeks to rebuild his global tariff regime.
The administration is considering new national security tariffs on a half-dozen industries, the Wall Street Journal reported, citing people familiar with the plans.
“The push and pull with tariffs is likely to be a distracting theme for markets for the remainder of the year, albeit with less volatility than the initial shock last April,” said Michael Landsberg at Landsberg Bennett Private Wealth Management.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:16 a.m. Tokyo time
- Hang Seng futures fell 0.7%
- Japan's Topix fell 0.2%
- Australia's S&P/ASX 200 rose 0.1%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1793
- The Japanese yen was little changed at 154.73 per dollar
- The offshore yuan was little changed at 6.8882 per dollar
- The Australian dollar rose 0.1% to $0.7065
Cryptocurrencies
- Bitcoin rose 0.5% to $64,873.16
- Ether was little changed at $1,863.48
Bonds
- The yield on 10-year Treasuries was little changed at 4.04%
- Australia's 10-year yield declined two basis points to 4.70%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
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