Asian markets fell on Tuesday led by chipmakers on unease about the massive funding demands of the AI boom, while a slide in oil prices did relatively little to lift bonds and left traders nervous about US rate hikes, maybe ⁠as soon as this week.

In Hong Kong, the benchmark Hang Seng Index opened up 64 points, or 0.26 percent, at 25,271.

The tech index was up 29 points, or 0.64 percent, at 4,731 while the China Enterprises Index was 31 points, or 0.38 percent, higher at 8,396.

Up north, the Shanghai Composite Index opened down 35 points, or 0.91 percent, at 3,823.

The Shenzhen Component Index was 318 points, or 2.25 percent, lower at 13,830 while the ChiNext Index was down 111 points, or 3.12 percent, at 3,478.

Nvidia shares shed five percent overnight after the Wall Street Journal reported the company is in talks to provide roughly US$250 billion in financing guarantees for OpenAI as part of a massive data centre project.

And the stellar 466 percent debut-day surge in CXMT Corp shares in Shanghai highlighted growing investor enthusiasm for the nation's semiconductor sector and the rising competitive threat from Chinese rivals.

"There is clearly a growing sense of optimism within mainland markets about China's ability ⁠to build a globally competitive AI ecosystem," said Chris Weston, head of research at Pepperstone.

China ⁠has also begun manufacturing domestically developed immersion ⁠deep ultraviolet lithography machines, a chipmaking tool long dominated by Dutch supplier ASML, The Information reported on Monday, sending ASML shares down 8.5 percent.

CXMT was down seven percent in early trade, as was chipmaking indexes.

In Tokyo, the Nikkei opened down 391 points, or 0.6 percent, at 64,539 before diving deeper into the red to be 2,828 points, or 4.36 percent, lower at 62,102 at one point before lunch.

In Seoul, the Kospi plunged 355 points, or 5.26 percent, to 6,400 before like the Nikkei in the wake of the report about China's potential lithography breakthrough, sinking 628 points, or 9.3 percent, into the red to 6,127 at one point before midday.

Brent crude futures extended Monday's nearly nine percent plunge, falling to US$87.55 a barrel, as a lull in hostilities between ⁠the United States and Iran followed Washington's abrupt suspension of air strikes on Saturday.

The break in fighting pushed down benchmark 10-year US Treasury yields by about four basis points to 4.64 percent but hardly budged shorter-term rates.

Traders have priced about a 38 percent chance that the Federal Reserve hikes by 25 basis points on Wednesday.

"The US-Iran War, by propelling the price of crude oil, remains the most important determinant of what will happen to the global economy in the next few months, and, by extension, what informs central bank ⁠policy outlooks, at the margin," said Thierry Wizman, currency and rates strategist at Macquarie Group.

"We expect that the [Fed] this week will wish to adopt a tightening bias." (Reuters & Xinhua)


Edited by Aaron Tam