Asian Shares Slide On Tech Woes

(RTTNews) - Asian stocks declined on Tuesday as investors rotated out of AI chip stocks on doubts over the sustainability of the AI boom.

As rising capital expenditures and competition become synonymous with rising semiconductor demand, investors are questioning the sustainability of record earnings.

Investors also awaited the U.S. Federal Reserve's meeting minutes and the start of the second-quarter U.S. earning season this week to gauge the outlook for consumer demand.

Ahead of the release of last month's Fed meeting minutes under new Chair Kevin Warsh on Wednesday, Fed Governor Chritopher Waller, in his assessment of inflation targeting, said that forward guidance can be a "valuable tool", but overly rigid commitments can hinder the Fed's ability to respond to changing data.

The U.S. dollar and Treasury yields rose in Asian trade, sending gold prices lower toward $4,100 on ounce.

Brent crude futures rose more than 1 percent toward $73 a barrel, reaching a one-week high after a vessel navigating off Oman's coast in the Strait of Hormuz was struck by a projectile, renewing concerns among shipowners and raising questions over the durability of the U.S.-Iran peace agreement.

China's Shanghai Composite index ended 1.26 percent lower at 3,990.24 despite authorities in Beijing and Hong Kong unveiling a broad package of measures to boost financial connectivity and yuan internationalization. Hong Kong's Hang Seng index dipped 0.51 percent to 23,496.89.

Japanese markets tumbled, dragged down by semiconductor heavyweights. The Nikkei average fell 2.12 percent to 68,256.96 while the broader Topix index settled 0.97 percent lower at 4,062.26.

Among the prominent decliners, Advantest dropped 2.3 percent, Tokyo Electron lost 3.9 percent and Kioxia Holdings slumped 11.3 percent.

Seoul stocks nosedived due to weakness in the tech sector. The Kospi index fell 4.91 percent to 7,656.31 on concerns over high AI-related stock valuations.

Shares of Samsung Electronics slumped 6.9 percent despite the world's largest memory chipmaker flagging a 19-fold jump in second quarter operating profit from a year earlier, fueled by soaring demand for memory chips needed in AI data centers.

SK Hynix plunged 6.1 percent after kicking off a U.S. share sale to raise 43 trillion won ($28.07 billion).

Australian stocks ended slightly lower, dragged down by miners and gold stocks. Banks and technology stocks performed well, helping limit the downside in the broader market.

The benchmark S&P/ASX 200 slipped 0.31 percent to 8,803.90 while the broader All Ordinaries index closed 0.36 percent lower at 9,004.70.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index finished marginally lower at 13,762.79 after a choppy session.

U.S. stocks closed higher overnight as investors returned from the Independence Day holiday weekend.

Broadcom and other chip stocks rallied after the company said it would expand its partnership with Apple through 2031 to develop and supply custom chips.

In economic news, data showed U.S. services sector growth slowed in June, but the employment index rebounded after months of contraction.

While the Dow rose 0.3 percent to reach a new record closing high, the tech-heavy Nasdaq Composite surged 1.1 percent and the S&P 500 advanced 0.7 percent.