Asian stocks slip as chip selloff, bond rout add to AI slowdown fears

Asian stocks slipped on Tuesday September 15 after a sharp selloff in US semiconductor shares stoked fears that artificial intelligence development could lose momentum.

MSCI's Asia Pacific equities gauge eased 0.1%. Japanese and South Korean benchmarks also edged lower, tracking Wall Street's Monday retreat, when the Philadelphia Semiconductor Index sank 5.9% in its steepest fall in over two months. Nvidia Corp and Intel Corp were among the biggest losers.

The Kospi dropped 0.44%, while Japan's Topix fell 0.40%. The Nikkei 225 bucked the trend, rising 0.21%. Hang Seng futures gained 0.6%.

Meanwhile, ahead of the opening at Dalal Street, that returns to the bourse after a long weekend, the GIFT Nifty is hinting at a positive start to the proceedings.

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The Japanese yen held steady at 154.45 per dollar, and the offshore yuan was little changed at 6.7091 per dollar.

The selloff followed a statement from Anthropic's chief executive officer Dario Amodei, who called for the pace of frontier AI development to be slowed to avert the risk of systems escaping human control and causing catastrophic harm. OpenAI's Sam Altman and SpaceXAI's Elon Musk backed the warning.

US President Donald Trump hit back at the call for caution, accusing critics of stoking a "SICK conspiracy" behind public resistance to AI data centres. He argued that only China would benefit from a slowdown. Chinese officials, for their part, dismissed the safety warnings as fearmongering and rejected suggestions that Beijing's AI progress posed a security risk.

Bond markets added to the unease. The 10-year US Treasury yield hovered near 5% in early Asian trade, having briefly crossed that threshold on Monday for the first time since 2023.

Investors demanded higher compensation for holding longer-dated debt amid widening fiscal deficits, heavy issuance and growing AI-related financing needs according to a Bloomberg report.

Rising yields raise borrowing costs economy-wide and reduce the present value of future corporate earnings, pressuring equity valuations already near record highs.

The bond rout raised the stakes for US Federal Reserve Chair Kevin Warsh ahead of Wednesday's policy decision, with markets pricing in a 95% probability of a rate increase.

Oil, meanwhile, extended its advance, with Brent crude up 0.7% trading near $107 a barrel, and West Texas Intermediate rising 0.7% to $102.12 a barrel, reviving inflation concerns just as the Fed prepares to act.

Also Read: What Amodei, Altman and Musk have said about AI risks, stoking 'doom' fears