SYDNEY: Asian shares fell on Thursday as concerns over exploding costs for AI investments prompted rotation out of tech industries, while a fresh decline in silver weighed on already submerged leveraged positions.
Google’s parent company Alphabet reported strong financial results on Wednesday, but its capital spending target for this year was $175 billion to $185 billion, well above analysts’ expectations. Shares fell more than 6% at one point, and were down just 0.4% in after-hours trading.
Concerns about job destruction from AI are driving investors away from big tech companies and into defensive stocks like Walmart. The recent decline caused by new legal tools in Anthropic’s Claude large-scale language model has wiped out approximately $830 billion in market value since January 28th.
The chipmaker’s shares fell 17% overnight, also due to disappointing results from Advanced Micro Devices.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.7%, weighed down by a 3.6% decline in South Korea’s KOSPI. Taiwanese stocks fell 1.1%, but financial and real estate stocks outperformed.
Japan’s Nikkei Stock Average fell 0.7%, but healthcare, real estate and utilities all rose.
“(Alphabet’s) capital spending increase was absolutely huge,” IG analyst Tony Sycamore said.
“At a time when everyone is so sensitive and nervous about what’s going on with software companies and how capital spending and AI valuations are going…I would have thought the reaction would be pretty negative.”
U.S. stock futures made an early attempt to recover in Asia, but quickly lost momentum. Nasdaq futures and the S&P 500 were both recently down 0.1%, while Euro STOXX50 futures were down 0.3%.
Bitcoin price also fell by 1.8% to $71,404, its lowest since November 2024.
Much attention is being focused on Amazon’s results later in the day, as well as policy meetings between the Bank of England and the European Central Bank, where interest rates are expected to remain unchanged.
silver rolls again
Precious metals prices also fell sharply on Thursday, snapping two days of gains, after last week’s massive implosion sent them plummeting from all-time highs.
Silver fell 15% to $74.6 an ounce, just above its recent low of $71.32. Gold also fell 1.8% to $4,863 an ounce.
The risk-sensitive Australian dollar fell 0.4% to $0.6969, and the kiwi also fell 0.3% to $0.5984.
The Japanese yen was stable at 156.82 yen to the dollar, after falling for four straight days ahead of Sunday’s general election. Opinion polls predict a decisive victory for Prime Minister Sanae Takaichi, backing her spending ambitions that have raised concerns about the country’s strained finances.
In the U.S. Treasury market, the benchmark 10-year Treasury yield fell 2 basis points to 4.2595%. January’s U.S. nonfarm payrolls report has been postponed from Friday’s scheduled release to Feb. 11 as the four-day partial government shutdown ends.
Oil prices fell on Thursday after rising for a second straight day as the United States and Iran agreed to hold talks in Oman on Friday despite differences on the topic.
US West Texas Intermediate crude oil fell 1.4% to $64.23 per barrel, while Brent crude oil futures also fell 1.4% to $68.47 per barrel. (Edited by Sri Navaratnam)
