FX168 Financial News Agency (Asia-Pacific) reported on Thursday (February 5) that Asian stock markets plummeted. Concerns over the 'explosive rise' in AI investment costs drove a rotation of funds from tech stocks to defensive sectors; meanwhile, silver plunged again, further squeezing already deeply loss-making leveraged positions.
The MSCI Asia-Pacific ex-Japan stock index fell by 1.8%, with the Korean KOSPI index plummeting 3.9%, significantly dragging down performance. Taiwan's stock market dropped by 1.1%, but the financial and real estate sectors relatively outperformed. Japan’s Nikkei index fell by 0.7%, but the healthcare, real estate, and utilities sectors all rose. #DecisionAnalysis#
U.S. stock index futures attempted a rebound during the Asian morning session but quickly lost momentum. Nasdaq futures and S&P 500 futures were both recently near flat, while EURO STOXX 50 futures fell by 0.3%.
Alphabet, Google's parent company, reported solid earnings on Wednesday, but its capital expenditure target for this year, set between $175 billion and $185 billion, was significantly higher than analysts’ estimates. Its shares experienced sharp volatility after-hours – once dropping more than 6% – before narrowing losses to close only 0.4% lower.
Amid concerns about AI’s impact on employment, investors are pulling out of tech giants and shifting into defensive stocks like Walmart. Since January 28, a sell-off triggered by a new legal tool launched by Anthropic’s large model Claude has wiped out approximately $830 billion in market value.
Advanced Micro Devices’ weaker-than-expected earnings did little to help sentiment recover, with the chipmaker plunging 17% overnight. Bitcoin also fell by 3.4% to $70,160, its lowest level since November 2024.
IG analyst Tony Sycamore said: “The magnitude of (Alphabet’s) increase in capital expenditure is absolutely enormous. Given how highly sensitive and jittery the market currently is regarding software companies, capital expenditures, and AI valuations... I expected a more negative market reaction.”
The market is also focused on Amazon’s earnings due later, as well as policy meetings by the Bank of England and the European Central Bank – both central banks are expected to keep interest rates unchanged.
Silver Plunges Again
Precious metals also fell sharply on Thursday, ending two consecutive days of rebounds. Last week’s 'epic collapse' had caused precious metals to plummet from record highs. Silver crashed 13% to $75.5, just slightly above its recent low of $71.32, while gold fell 2% to $4,862.
The Australian dollar, which is more sensitive to risk, fell by 0.5% to 0.6965 US dollars; the New Zealand dollar dropped by 0.3% to 0.5985 US dollars. The Japanese yen remained largely unchanged against the US dollar at 156.82. The yen had weakened for four consecutive days ahead of the general election on Sunday; polls indicated that Prime Minister Sanae Takaichi might secure a decisive victory. Her policy inclination towards increased spending has raised market concerns about Japan's already strained fiscal conditions.
In the US Treasury market, the benchmark 10-year Treasury yield fell by 1 basis point to 4.2656%. Due to a four-day partial government shutdown that has now ended, the January US nonfarm payroll report, originally scheduled for Friday, has been postponed to February 11.
Oil prices fell by approximately 2% on Thursday as the US and Iran agreed to hold talks in Oman on Friday, easing concerns over potential military conflict that could disrupt supply. US WTI crude dropped by 2.1% to $63.76 per barrel; Brent crude futures also declined by 2.1% to $68 per barrel.
