Asian stocks tumble on AI jitters after Samsung forecast; oil stable

TOKYO: Asian stocks declined on Tuesday, with South Korea leading losses after ​Samsung Electronics' forecast triggered a reassessment of stretched valuations tied to the AI trade, while oil prices largely stabilised ‌as investors refocused on supply and demand.

Samsung Electronics, the world's largest memory chipmaker, estimated April-June operating profit at 89.4 trillion won ($58.44 billion), an eye-popping 19-fold jump and a third straight quarter of record operating profit.

Still, South Korean shares slumped 8%, triggering circuit breakers as Samsung Electronics lost 9.8%, reflecting concerns over the durability of the AI-driven ​chip boom.

The AI jitter rippled across Asian markets, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 2.6% and chipmaker-heavy ​Taiwan down 1.8%. Japan's Nikkei shed 2.4%.

The recent sharp rally in AI-related shares has likely been driven by ⁠concerns over the economy and inflation, with worries about the outlook — including worsening tensions involving Iran — prompting investors to seek refuge in the ​sector, said Toru Suehiro, chief economist at Daiwa Securities.

"While it would be healthier for share prices to move in line with business conditions and the ​real economy, those conditions do not change that rapidly," Suehiro said in a note, adding that markets were therefore likely to remain range-bound.

Morgan Stanley said in a note dated Monday that the recent weakness in U.S. semiconductor stocks is a sign that market gains are broadening, with investors likely to turn toward AI "hyperscalers" as well ​as consumer discretionary, transport and biotechnology shares.

In early European trades, the pan-region Euro Stoxx 50 futures lost 0.4%, German DAX futures fell 0.3% and ​FTSE futures were up almost 0.1%.

U.S. S&P 500 E-minis dipped 0.3%, Nasdaq 100 E-minis retreated 1.2% and Dow E-minis were down 0.02%.

Oil edged higher, but gains ‌were limited ⁠after prices hit pre-Iran war levels on Monday. U.S. crude rose 0.85% to $69.13 a barrel and Brent rose to $72.62 per barrel, up 0.88% on the day.

U.S. President Donald Trump, who has pressured Europe to increase defence spending and clashed with European leaders over the Iran war and Greenland, will attend a NATO meeting in Turkey beginning on Tuesday.

Trump said on Monday the U.S. would either reach a deal with Iran or "finish the job," ​renewing his threat of military action ​as Tehran projects defiance following the ⁠funeral of former Supreme Leader Ayatollah Ali Khamenei.

In currency markets, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, traded at 100.88, with the euro down 0.03% ​at $1.1436.

The yen bounced back from the weaker side of 162 per dollar, near 40-year lows, and was ​last up 0.17% at ⁠161.79 per dollar. Traders remained on watch for intervention amid signs of a possible shift in strategy by Japanese authorities.

On Tuesday, Japanese government bond yields fell from multi-decade highs after a sale of super-long-term debt showed strong demand. The yield on benchmark U.S. 10-year notes rose 1.62 basis points to 4.495%, from ⁠4.479% late ​on Monday.

Fed watchers will get another glimpse into how new Chair Kevin Warsh steers ​the central bank when it releases Federal Open Market Committee minutes on Wednesday, the first of his tenure.

In commodity markets, gold lost 0.91% at $4,125.59 an ounce, trading below a two-week ​high. Silver fell 2.17% to $60.73 an ounce and copper declined 0.58% to $13,326.00 a ton.