Asian Markets Decline Sharply as AI Sell-Off and Interest Rate Doubts Shake Global Investor Confidence

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Summary:

Asian shares dropped significantly on Friday, echoing Wall Street’s sharp losses amid growing anxiety over inflated AI stock valuations and uncertainty about further U.S. interest rate cuts...

AI bubble fears ripple from Wall Street to Asia

Stock markets across Asia slid into the red on November 14, 2025, tracking Wall Street’s steepest decline since April. The global rout was triggered by a broad sell-off in artificial intelligence (AI) stocks, particularly those seen as overvalued after months of parabolic gains. Nvidia, which lost 3.6% overnight, led the downturn alongside names like Palantir, Super Micro Computer, and Broadcom, all of which had delivered triple-digit returns earlier in the year.

The tech pullback reflects rising concern that AI stocks may have entered bubble territory, reminiscent of the dot-com boom-and-bust cycle of the early 2000s. The comparison is not merely symbolic; it highlights a growing belief that valuations are now detached from fundamental earnings potential, leading investors to reduce exposure across the sector. This fear, combined with evaporating expectations for another U.S. rate cut in December, caused sharp risk aversion.

Asia’s tech-heavy indexes lead regional slide

South Korea’s Kospi bore the brunt of the Asia-wide retreat, plunging 3.2% to 4,038.61. Major chipmakers were hit hard: Samsung Electronics fell 4.1%, SK Hynix tumbled 6.4%, and LG Energy Solutions declined 3.7%. Taiwan’s Taiex dropped 1.7%, while Japan’s Nikkei 225 reversed gains to close down nearly 1.7% at 50,438.99, led by a 5.7% drop in SoftBank Group, which has extensive exposure to AI startups and high-tech ventures.

The widespread losses across Asia indicate more than just a reactionary move to Wall Street. They reflect an underlying dependency on the global tech cycle, particularly among export-heavy economies like South Korea, Taiwan, and Japan, where semiconductors and AI-related hardware are critical economic drivers. The correlation between U.S. market performance and regional tech exposure reveals the fragility of Asia’s current growth path amid external shocks.

China’s economic data adds to bearish sentiment

Chinese markets also struggled. The Hang Seng in Hong Kong lost 1.3% to 26,732.99, while the Shanghai Composite dipped 0.2% to 4,022.89. Contributing to the weak tone was the release of disappointing industrial output data, which showed only 4.9% year-on-year growth in October, the slowest pace in 14 months and well below September’s 6.5% expansion. Fixed-asset investment also fell 1.7% over the January–October period, a deterioration from the 0.5% drop reported earlier.

The persistent weakness in China’s real estate sector continues to suppress business investment and dampen consumer sentiment. These figures underline structural economic challenges rather than short-term fluctuations and likely played a role in dragging down broader market sentiment across the region. The relationship here is partly causal: sluggish factory and investment performance points to deep-rooted domestic vulnerabilities that amplify external shocks like AI-led volatility.

Australia and India join the retreat

Australia’s ASX 200 dropped 1.4% to 8,628.30 as optimism for a rate cut by the Reserve Bank of Australia faded following a robust jobs report, which reinforced the case for a prolonged hold on monetary easing. India’s BSE Sensex was relatively resilient but still lost 0.4%, suggesting that even emerging market investors are taking a more cautious stance in response to global rate uncertainty and tech sector headwinds.

The S&P 500 fell 1.7% to 6,737.49, marking its second-worst day since April. The Dow dropped 1.7% from a record high, and the Nasdaq Composite shed 2.3% to 22,870.36. The plunge followed the fading probability of a third rate cut by the Federal Reserve in 2025, with current odds standing at just 51.9% down from nearly 70% a week ago, according to CME Group data.

The unwinding of interest rate cut expectations is not simply a reflection of better economic data. Rather, it reveals investor concern that high inflation and tepid labor market recovery are creating a policy bind for the Fed reducing its ability to stimulate further without risking price instability. This policy uncertainty is now spilling over into global equity markets.

With AI stocks stumbling and monetary policy clarity slipping, global equity markets are entering a more volatile phase. Asian markets, particularly those with strong tech exposure, are feeling the pinch acutely, compounded by weak macroeconomic data from China and mixed signals from central banks like the Fed and RBA. Until investors regain confidence in earnings sustainability and policy direction, both valuation-driven selloffs and macro-induced corrections are likely to remain key themes across global markets.

Source: AP

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