Asian markets opened lower in the final full trading week of 2025 as mounting concerns over the earnings outlook for technology companies — and their massive spending on AI — sapped risk sentiment.
MSCI’s equities gauge for the region fell 0.4%, with South Korea — a poster child for AI exuberance — slumping more than 2%. Equity-index futures for US benchmarks fluctuated between small gains and losses on Monday, after Wall Street closed Friday with tech stocks leading a slide. Bitcoin, which has declined in six of the past seven weeks, edged lower to trade around $88,000.
Global risk appetite has been ebbing amid skepticism that tech stocks, which have propelled global benchmarks to record highs, can continue to warrant their lofty valuations and aggressive AI spending. Asian markets, strong outperformers this year, appear particularly vulnerable given the region’s heavy reliance on manufacturing the components underpinning the technology boom.
Friday’s moves underscored “the potential that we could see the AI bubble burst at some point in the near future,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney. “We have seen good growth for Asian markets on the back of AI in particular and tech in general over the last year, despite trade concerns, so I expect them to take a decent step back in trading today.”
From a recent selloff in the shares of Nvidia Corp. to Oracle Corp.’s plunge after reporting mounting spending on AI, to souring sentiment around a network of companies exposed to OpenAI, signs of skepticism are increasing. Looking to 2026, the debate among investors is whether to rein in AI exposure ahead of a potential bubble popping or double down to capitalize on the game-changing technology.
The queasiness about the AI trade involves its uses, the enormous cost of developing it, and whether consumers ultimately will pay for the services. Those answers will have major implications for the stock market’s future.
Elsewhere, Treasuries stabilized Monday as debate raged in markets and among Federal Reserve officials on how much to ease policy next year.
Cleveland Fed President Beth Hammack said she would prefer interest rates to be slightly more restrictive to keep putting pressure on inflation. Chicago Fed President Austan Goolsbee said he is projecting more interest-rate cuts for 2026 than many of his colleagues.
Gold steadied following four days of gains, after the conflicting remarks from Fed officials prompted traders to curb bets on further monetary easing in the US next year. The dollar traded in a tight range against major peers after President Donald Trump said the new Fed chair will want rates to fall.
The global reserve currency notched its longest stretch of weekly losses last week since August as bets solidified for two Fed rate cuts in 2026, one more reduction than the central bank is indicating, according to data compiled by Bloomberg.
In Asia Monday, a slew of Chinese data including retail sales and industrial production will be in focus. The reports will probably show the economy lost more speed in November, with slower consumption growth and a deeper decline in investment, according to Bloomberg Economics.
This week, the final flurry of major central bank policy meetings is due, including those from the Bank of England and the Bank of Japan. A heavy slate of global data to help assess the direction of monetary policy in 2026 is also due, including a growth reading in New Zealand, European activity data and inflation prints in Canada and the UK.
“The Santa Rally can’t get off the ground amid fresh AI valuation fears,” said Kyle Rodda, a senior analyst at Capital.com. “While hardly as high stakes as last week, there’s enough event risk there to keep investors on their toes, possibly providing the spark for that Santa rally – or equally, a deepening sell-off.”
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