Asia stocks flounder as Oracle, AI jitters overshadow dovish Fed signals

Updates with moves lower, India open

Investing.com– Most Asian stocks turned lower on Thursday as technology shares tumbled after middling earnings from Oracle sparked doubts over the broader artificial intelligence trade.

Losses in tech and doubts over AI largely overshadowed dovish signals from the U.S. Federal Reserve, which cut interest rates and signaled plans to increase its asset-buying activities.

Wall Street futures tumbled during the Asian session, despite a positive close on Wednesday. S&P 500 Futures fell 0.8% 23:41 ET (04:41 GMT), while Nasdaq 100 Futures slid 1.1%.

In Asia, Japanese markets were the worst hit by tech and AI losses.

Asia stocks take limited support from dovish Fed outlook

Non-tech sectors in Asia advanced, with Singapore’s Straits Times index up 0.3%, while South Korea’s KOSPI was flat as losses in tech were offset by gains in industrials.

China’s Shanghai Shenzhen CSI 300 index fell 0.2%, while the Shanghai Composite index fell 0.5%. Hong Kong’s Hang Seng index was flat.

Australia’s ASX 200 rose 0.2% as softer-than-expected labor market data fueled some expectations that the Reserve Bank will be forced into cutting interest rates.

India’s Nifty 50 index, which has a relatively smaller weightage of tech stocks, rose 0.2%.

Regional markets took some positive cues from Wall Street, which rose following an as-expected 25 basis point rate cut by the Federal Reserve.

While Fed Chair Jerome Powell did flag a higher bar to cut interest rates further, he also announced that the bank will begin buying about $40 billion on Treasury notes from next month.

Such a move heralds looser monetary conditions in the coming months and bodes well for market liquidity.

Anticipation of the Fed meeting had spurred some cautious plays in Asian markets earlier this week.

Japanese shares lag on tech losses, China tensions

Japanese shares lagged their peers on Thursday, with the Nikkei 225 index down 0.8%, while the TOPIX shed 0.7%.

The Nikkei was weighed chiefly by losses in AI-linked tech and industrial stocks, which fell after Oracle’s earnings and capex guidance sparked more concerns about stretched AI spending.

Oracle slid over 10% in aftermarket trade on Wednesday, while major chips supplier Nvidia lost over 1%. Broader U.S. AI and tech stocks also fell.

SoftBank Group Corp. (TYO:9984), which is heavily exposed to Oracle (NYSE:ORCL) and the AI trade through its OpenAI position, slid over 8% and was the biggest decliner on the Nikkei.

Japanese stocks also remained under pressure from a continued diplomatic row between Tokyo and Beijing, over earlier comments made by Japanese Prime Minister Sanae Takaichi on Taiwan.

But losses in tech were somewhat soothed by optimism over NVIDIA (NASDAQ:NVDA) recently being allowed to sell more advanced AI chips in China. Japanese supplier Advantest Corp. (TYO:6857) rose as much as 4%.

Chinese Chipmaking stocks extended losses into a third straight session as the prospect of Nvidia reentering the market pointed to heightened competition in the sector. Semiconductor Manufacturing International Corp (HK:0981), the country’s biggest chipmaker, and Hua Hong Semiconductor Ltd (HK:1347), both lost about 2.5% each in Hong Kong trade.

TSMC (TW:2330), the world’s largest contract chipmaker, fell 2.3% in Taiwan trade, after it said on Wednesday that its sales in November fell from the prior month.