Asian shares slip after another sell-off of AI stocks on Wall St; oil prices rise

HONG KONG: Shares are mostly lower in Asia following another sell-off of artificial-intelligence stocks that dragged the US market sharply lower.

US futures advanced and oil prices gained more than USD 1 a barrel.

Tokyo's Nikkei lost 0.5 per cent to 63,878.60, while the Kospi in South Korea was also down 0.2 per cent, at 7,720.75.

Hong Kong's Hang Seng edged 0.2 per cent higher, to 24,468.82, but the Shanghai Composite index fell 0.2 per cent to 3,983.80.

In Australia, the S&P/ASX 200 likewise shed 0.2 per cent to 8,632.50.

Taiwan's Taiex slipped 0.4 per cent.

On Wednesday, Wall Street's former superstars continue to face heavy scrutiny.

The S&P 500 dropped 1.6 per cent for its first back-to-back drop in three weeks. Closing at 7,266.99, it's back to where it was in early May.

The Dow Jones Industrial Average tumbled 953 points, or 1.9 per cent, to 49,918.78. The Nasdaq composite led the market lower with a 2 per cent slide, to 25,169.50.

Wall Street has been shaky since last week, when AI stocks went from roaring to records to suddenly turn lower. Among the worries is that their prices may have shot too high, too fast because of AI mania. The question now is whether the break lower has cleared out excessive optimism that may have built into their stock prices, or if it's the start of a longer downturn.

Super Micro Computer, which sells AI servers, tumbled 28 per cent after saying late Tuesday that it plans to raise USD 7 billion in cash by selling shares of stock and convertible preferred stock. Such moves raise the most money for companies when their stock prices are high, and they can dilute the ownership stakes of existing shareholders.

Micron Technology swung from an early loss of nearly 4 per cent to a modest gain and back to a loss of 4.7 per cent. It's coming off a wild stretch where it sank 7.7 per cent last Thursday, then plunged another 13.3 per cent Friday and rallied 9.9 per cent Monday. Despite all the swings, the computer memory maker's stock is still up 212.5 per cent for the year so far.

Nvidia, the chip company that's grown into a nearly USD 4.9 trillion behemoth because of the AI boom, was the heaviest weight on the S&P 500 after falling 3.7 per cent. The second heaviest was another AI winner, Broadcom, which fell 5.1 per cent.

Some of the pressure on AI stocks could also be coming from investors pulling cash out to prepare for high-profile debuts on the US stock market for several AI giants. SpaceX's initial public offering could come later this week, for example.

Weakening stocks for companies with big fuel bills also pulled the market lower. United Airlines sank 6.2 per cent, and cruise-operator Carnival fell 6.3 per cent after oil prices rose due to the latest fighting in the war with Iran.

The price for a barrel of Brent crude oil rose 1.8 per cent to USD 93.10 on Wednesday after President Donald Trump warned Iran would "pay the price" for stalled negotiations between the two on their war. The war has been keeping the Strait of Hormuz effectively shut to oil tankers, which has prevented the delivery of crude from the Persian Gulf to customers worldwide.

High oil prices have sent inflation higher, and a report on Wednesday showed that prices for US consumers jumped in May at the highest speed in three years.

Traders are betting the Federal Reserve will have to hike its main interest rate at least once this year, given price pressures and the strength of the US job market.

High yields can slow entire economies and undercut prices for all kinds of investments, including stocks and cryptocurrencies. They hit investments seen as the most expensive in particular, and some critics are calling AI a bubble where investment inflated too far.

Early Thursday, Brent crude oil was up USD 1.34 at USD 94.44 per barrel. US benchmark crude oil gained USD 1.50 to USD 91.53 per barrel.

The US dollar slipped to 160.44 Japanese yen from 160.56 yen late Wednesday. The euro rose to USD 1.1555 from USD 1.1537.