Asian stock markets collectively declined, South Korean stocks plunged 4.5%, Japanese stocks fell over 1%, and SK Hynix dropped 7%.

Asian stock markets fell across the board on Tuesday, failing to extend the rebound in technology stocks seen overnight on Wall Street, with Korean chip stocks posting particularly significant declines. Meanwhile, U.S. Treasury yields remained elevated as investors awaited this week’s major tech earnings reports for further confirmation of market direction.

On Tuesday, Korea's major stock indices all fell by more than 4%, leading declines in Asia-Pacific equity markets. The MSCI Asia-Pacific Index slipped about 1%, with losses seen across 8 of its 11 sub-sectors, and the number of losing stocks outnumbering gainers by about three to one.

The weakness in Asian markets stood in stark contrast to U.S. equities. On Monday in New York, the Philadelphia Semiconductor Index climbed 1.6%, snapping an eight-session losing streak; the Nasdaq Composite gained more than 1%, with Nvidia up 1.4% and Tesla rising 3.8%.

However, during Asian trading hours, Nasdaq 100 futures briefly turned positive early in the session before reversing to fall 0.1%, reflecting a divergence in regional sentiment.

The Asia-Pacific tech sector broadly weakened on Tuesday, as ongoing concerns about the sustainability of AI-driven capital expenditure continued to dampen investor confidence and significantly offset the uplift from the previous U.S. market rebound.

Chip giant SK Hynix plunged more than 7%, nearing its lowest level since April; Samsung Electronics dropped over 3%.

Data center infrastructure firm Elice opened at 75,700 KRW, down 16.35% from its IPO price of 90,500 KRW, and at one point plummeted 32% during intraday trading, further denting market sentiment.

Australia’s S&P/ASX 200 Index slipped about 0.84%. Japanese markets also were not spared. The Nikkei 225 Index slid 1%, while the Topix lost about 0.9%.

Japanese AI hardware and data center chains declined, with tech stocks broadly undergoing an adjustment. Leading semiconductor packaging materials company Risonoko Holdings plummeted 6.43% in a single day; core AI data center fiber supplier Fujikura plunged 6.34%. Tech bellwether SoftBank Group likewise slumped 6.34%. Furthermore, in the optical communication cable segment, Furukawa Electric dropped 5.42%.

Major semiconductor wafer maker Shenggao slid 4.79%, while chip equipment manufacturer Ebara Corporation declined 4.12%; software testing leader SHIFT Software, which previously enjoyed a surge due to strong results, also saw profit-taking today and fell 4.12%.

There are also notable policy moves in Japan. On Monday, Japanese Prime Minister Sanae Takaichi said on social media, she does not rule out the possibility of issuing government bonds to finance the overall budget, while reiterating that no special deficit bonds would be used to fill the gap caused by a temporary cut in sales tax.

Japan’s Minister for Economic and Fiscal Policy Minoru Kinai said that, time permitting, he hopes to attend this month’s Bank of Japan policy meeting and emphasized respect for the central bank’s legal independence in monetary policy, stating, “I have never considered asking the Bank of Japan to delay its meeting decision.”

About 70 S&P 500 constituent companies are set to report earnings this week, with results from tech giants such as Meta Platforms drawing particular attention. Mark Haefele, Chief Investment Officer at UBS, commented:

The earnings results will show whether robust profit growth can restore confidence in the stock market’s rebound. We continue to expect steady growth and earnings to support equities, while also seeing allocation value in quality bonds.

In addition, the trajectory of the U.S. Treasury market is also curbing risk appetite.

The 10-year U.S. Treasury yield remained around 5.13%, after rising 6 basis points the previous session, as waning safe-haven demand pushed yields higher. Australia’s 10-year government bond yield climbed another 5 basis points to 5.28%.

Meanwhile, political turmoil in France has sparked additional concerns about European assets. Over the weekend, protests over the cost of living erupted into riots and looting in France, causing French government bonds to fall.

The U.S. Dollar Index hovered around 102, while the euro made a modest rebound against the dollar. However, Thomas Hempell, Head of Macro & Market Research at Generali Investments, commented:

There are now very few euro bulls. With ongoing tensions in Iran and unresolved political risks in France, the euro is unlikely to see a significant rebound in the near term.

In other markets, gold extended its overnight losses, declining by another 0.34% to about $4,126 per ounce.

Brent crude inched up 0.27% to $109.84 per barrel, fluctuating narrowly due to a combination of Middle Eastern supply risks and technical resistance. Bitcoin fell 0.5% to around $81,543.