Asian Markets Fall After AI Stock Rebound Lifts U.S. Indexes

Asian shares retreated on Tuesday, with South Korea's Kospi index shedding nearly 8%, even as a rebound in artificial intelligence stocks propelled Wall Street to new heights. The Dow Jones Industrial Average closed at a record high, and the S&P 500 neared its all-time peak.

In Seoul, the Kospi fell 7.6% to 7,444.13, with major chipmakers Samsung Electronics and SK Hynix seeing their shares drop by 8.7%. This decline occurred even after Samsung reported a nearly 19-fold surge in operating income and more than doubled its revenue in the last quarter. The gyrations in AI stocks reflect investor concerns about whether the rapid influx of capital into AI chips and data centers can yield sufficient productivity and profit gains to justify current valuations.

"The first proper AI stress test may not have arrived with weak demand, a capex warning, or some sudden crack in the data center story. It may have arrived with Samsung posting an extraordinary quarter and the stock falling anyway,” Stephen Innes of SPI Asset Management commented.

Further testing investor appetite for AI-related investments, SK Hynix plans to raise approximately $28 billion through a share offering in the United States. This offering could rank as one of the largest in U.S. history, following SpaceX's $75 billion IPO last month. SK Hynix's stock in Seoul has already more than tripled this year amid the AI boom, despite recent significant losses.

Other Asian markets also experienced declines. Tokyo's Nikkei 225 lost 1.8%, with computer chipmaker Tokyo Electron falling 3.4% and Kioxia Holdings shedding 10.7%. The Hang Seng index in Hong Kong declined 0.4%, while the Shanghai Composite index gave up 1%. Taiwan's Taiex also saw a decrease of 1.8%.

In Australia, the S&P/ASX 200 declined 0.3%, and India's Sensex edged 0.1% higher.

On Monday, the S&P 500 rose 0.7% to 7,537.54, placing it within 1% of its record high, despite a majority of stocks within the index declining. The Nasdaq composite gained 1.1% to 26,121.16, driven by strength in AI technology companies. The Dow Jones Industrial Average rose 0.3% to 53,055.91.

Broadcom was a significant contributor to the S&P 500's rise, increasing 3.7% after announcing long-term agreements to supply silicon products to Apple. This followed two consecutive days of losses exceeding 2% at the end of the previous week.

SpaceX, which is scheduled to join the Nasdaq 100 index, erased an early gain to close down 1% in its last day of trading before the inclusion. This move will require funds that track the index, such as the QQQ exchange-traded fund, to purchase SpaceX shares.

In other AI-related news, TeraWulf climbed 4.9% after announcing that Anthropic agreed to a 20-year deal to utilize its data center in Kentucky, a deal expected to generate roughly $19 billion in revenue for TeraWulf. The company is in the process of shifting its business focus from bitcoin mining to high-performance computing.

Oil prices saw an increase, with Brent crude rising 52 cents to $72.51 a barrel. This level is near where prices were before late February attacks on Iran by the United States and Israel led to a price spike. Concerns about supply stability persist, as a tanker off the coast of Oman in the Strait of Hormuz caught fire early Tuesday morning after being struck by a projectile, according to the British military. This incident is the latest in a series of attacks targeting vessels in the Strait of Hormuz, a critical chokepoint for global oil and gas trade. Iranian state television reported the tanker was attacked after ignoring warnings but did not directly claim responsibility for the assault. U.S. benchmark crude added 43 cents to $68.98 a barrel.

The U.S. dollar weakened against the Japanese yen, falling to 161.73 yen from 162.09 yen. The euro slipped slightly to $1.1439 from $1.1442.