Asian stocks slumped on Thursday, February 5, as concerns about the exploding costs of AI investment encouraged a rotation out of tech, while a renewed slide in silver squeezed leveraged positions that were already underwater.
Google parent Alphabet (GOOGL.O) opens a new tab and reported solid results on Wednesday, but it was targeting capital expenditure of $175 billion to $185 billion this year, sharply above analysts’ estimates.
Shares swung wildly – down over 6% at one point – before settling just 0.4% lower after-hours. Investors have been rotating out of technology giants and into defensive stocks such as Walmart (WMT.O), opens new tab amid fears of AI disruptions to jobs. The recent selloff, triggered by a new legal tool from Anthropic’s Claude large language model, has wiped out about $830 billion in market value since January 28.
Disappointing earnings results from Advanced Micro Devices (AMD.O), which opens a new tab, didn’t help either, with the chipmaker tumbling 17% overnight.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab, tumbled 1.8%, weighed by a 3.9% plunge in South Korea’s KOSPI (.KS11), opens new tab. Taiwanese shares (.TWII), opens new tab, lost 1.1%, but financials and real estate outperformed. Japan’s Nikkei (.N225), opens new tab skidded 0.7%, while healthcare, real estate and utilities were all up.
“That increase in (Alphabet) capex was absolutely enormous,” said Tony Sycamore, analyst at IG.
“At a time when everyone is hyper-sensitive and hyper-nervous about what’s going on with the software companies, with what’s going on with CAPEX and AI valuations… I would have thought the reaction would be quite negative.”
U.S. stock futures attempted a recovery early in Asia, but that quickly lost momentum. Both Nasdaq futures and the S&P 500 were last flat, while the EURO STOXX 50 futures slipped 0.3%.
Bitcoin prices also tumbled 3.4% to $70,160, the lowest level since November 2024.
Much attention is on Amazon’s (AMZN.O), opens new tab results later in the day, as well as policy meetings from the Bank of England and the European Central Bank, where rates are expected to be on hold.
SILVER TUMBLES AGAIN
Precious metals also dived on Thursday to snap two days of gains after an epic implosion last week saw them plunge from lofty record highs. Silver tumbled 13% to $75.5 an ounce, just a touch above the recent low of $71.32. Gold also fell 2% to $4,862 an ounce.
The risk-sensitive Australian dollar fell 0.5% to $0.6965, while the Kiwi also slipped 0.3% to $0.5985.
The Japanese yen was steady at 156.82 per dollar, after falling for four straight days ahead of a general election on Sunday, where polls are tipping a decisive victory for Prime Minister Sanae Takaichi, endorsing her spending ambitions that have raised concerns about the nation’s strained finances.
In the Treasuries market, the benchmark 10-year yield slipped 1 basis point at 4.2656%. The U.S. non-farm payrolls report for January has been pushed back from its scheduled release on Friday to February 11 due to a four-day partial government shutdown that has now ended.
Oil prices fell about 2% on Thursday after the U.S. and Iran agreed to hold talks in Oman on Friday, easing concerns that a potential military conflict between them could disrupt supply.
U.S. West Texas Intermediate crude fell 2.1% to $63.76 per barrel, while Brent crude futures also dropped 2.1% to $68 per barrel.
