Asian stocks follow US lower, China set to return

Asian shares have outperformed, with MSCI’s regional gauge rising 12% this year compared with a 0.1% decline in the S&P 500 over the same period.

• Asian shares dip as AI profit fears hit Wall Street
• South Korea stocks fall 0.5%, MSCI Asia Pacific Index down 0.2%
• IBM drops 13% after Anthropic's AI announcement on COBOL

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Asian shares fell at the open after fresh anxiety over the impact of artificial intelligence on company profits roiled Wall Street, while uncertainty over tariffs added to traders’ concerns.

The MSCI Asia Pacific Index edged down 0.2%, with shares in South Korea — a bellwether for AI investments — falling 0.5%. Attention later will turn to mainland China’s markets, which are set to reopen after the Lunar New Year holiday period.

The moves in Asia came after the S&P 500 Index slid 1%, with tech, delivery and payment shares hit as Citrini Research laid out the potential AI risks to various industries. International Business Machines Corp. tumbled 13% in its worst day since October 2000 as Anthropic said its Claude Code could help modernize COBOL, a programming language mainly run on IBM computers.

Amid lingering uncertainty over President Donald Trump’s tariffs, concerns about AI-driven disruption are prompting traders to dump shares of any company seen at the slightest risk of being displaced. Those worries have also grown despite solid results from megacaps amid doubts over whether big investments in the technology will pay off soon.

“The software selloff is a reminder of what can happen when momentum-driven sectors shift into reverse,” said Steve Sosnick at Interactive Brokers. “The broader, more important question is: How many sectors can go into reverse before they drag the broader market along with them?”

While software companies have been among the hardest hit, insurance brokers, private credit firms, cybersecurity and even real estate services stocks in the US have all been caught up in the so-called AI scare trade.

Asian shares have outperformed, with MSCI’s regional gauge rising 12% this year compared with a 0.1% decline in the S&P 500 over the same period. That marks the index’s strongest start to a year relative to the US benchmark on record.