Technology shares fell sharply across Asia on Friday as investors questioned whether the enormous sums being poured into artificial intelligence will ever pay off, sending money flooding into bonds and safe-haven currencies instead.

South Korea’s KOSPI slumped 5% on the day, taking its fall for October to more than 17%. Japan’s Nikkei dropped 3% ahead of the Bank of Japan’s rate decision, while China’s blue-chip CSI300 index headed for its largest monthly fall in a decade after nearly four months of declines in AI-linked stocks. Traders fear a slowdown in demand for chips and data-centre equipment could crush revenues across the sector.

Bonds rally as investors seek safety

The rush for safety pushed bonds toward their biggest monthly gain in nearly three years. Benchmark 10-year US Treasury yields fell by more than 7 basis points in Tokyo trade on Friday to 4.91%, a drop of some 37 basis points through October — the largest one-month fall since December 2023. Haven currencies also strengthened, with the yen up about 0.3% at 157.20 per dollar and the Swiss franc near a one-month high at 0.8213 to the dollar.

The sell-off followed a weak night on Wall Street, where the Nasdaq lost more than 1%, dragged lower by Alphabet after it revealed heavy AI-related spending in its quarterly earnings. Nasdaq 100 futures fell a further 1.4% in Asian hours, and chipmakers across the region were caught in the downdraught.

India bucks the regional trend

India stood out against the gloom. Shares there were set to open marginally higher on Friday after upbeat earnings fuelled a rebound in the previous session, with GIFT Nifty futures at 22,981 as of 7:42 a.m. IST, pointing to a positive start for the benchmark Nifty 50, which closed at 22,936.75 on Thursday. Both Indian benchmarks have gained in October, on course to snap a two-month losing streak — though higher crude prices remain a risk to further gains.

Sources: Devdiscourse (Reuters); Reuters.