GLOBAL MARKETS: Asian stocks tumble on AI jitters after Samsung forecast; oil stable

Asian stocks declined on Tuesday, with South Korea leading losses after Samsung Electronics' forecast triggered a reassessment of stretched valuations tied to the AI trade, while oil prices largely stabilised as investors refocused on supply and demand.

Samsung Electronics 005930.KS, the world's largest memory chipmaker, estimated April-June operating profit at 89.4 trillion won ($58.44 billion), an eye-popping 19-fold jump and a third straight quarter of record operating profit.

Still, South Korean shares .KS11 slumped 8%, triggering circuit breakers as Samsung Electronics lost 9.8%, reflecting concerns over the durability of the AI-driven chip boom.

The AI jitter rippled across Asian markets, with MSCI's broadest index of Asia-Pacific shares outside Japan .MISX00000PUS falling 2.6% and chipmaker-heavy Taiwan .TWII down 1.8%. Japan's Nikkei .N225 shed 2.4%.

The recent sharp rally in AI-related shares has likely been driven by concerns over the economy and inflation, with worries about the outlook — including worsening tensions involving Iran — prompting investors to seek refuge in the sector, said Toru Suehiro, chief economist at Daiwa Securities.

"While it would be healthier for share prices to move in line with business conditions and the real economy, those conditions do not change that rapidly," Suehiro said in a note, adding that markets were therefore likely to remain range-bound.

Morgan Stanley said in a note dated Monday that the recent weakness in U.S. semiconductor stocks is a sign that market gains are broadening, with investors likely to turn toward AI "hyperscalers" as well as consumer discretionary, transport and biotechnology shares.

In early European trades, the pan-region Euro Stoxx 50 futures STXEc1 lost 0.4%, German DAX futures FDXc1 fell 0.3% and FTSE futures FFIc1 were up almost 0.1%.

U.S. S&P 500 E-minis EScv1 dipped 0.3%, Nasdaq 100 E-minis NQcv1 retreated 1.2% and Dow E-minis YMcv1 were down 0.02%.

OIL MARKET STEADY

Oil edged higher, but gains were limited after prices hit pre-Iran war levels on Monday. U.S. crude CLc1 rose 0.85% to $69.13 a barrel and Brent LCOc1 rose to $72.62 per barrel, up 0.88% on the day. O/R

U.S. President Donald Trump, who has pressured Europe to increase defence spending and clashed with European leaders over the Iran war and Greenland, will attend a NATO meeting in Turkey beginning on Tuesday.

Trump said on Monday the U.S. would either reach a deal with Iran or "finish the job," renewing his threat of military action as Tehran projects defiance following the funeral of former Supreme Leader Ayatollah Ali Khamenei.

In currency markets, the dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, traded at 100.88, with the euro EUR= down 0.03% at $1.1436.

The yen JPY= bounced back from the weaker side of 162 per dollar, near 40-year lows, and was last up 0.17% at 161.79 per dollar. Traders remained on watch for intervention amid signs of a possible shift in strategy by Japanese authorities.

On Tuesday, Japanese government bond yields fell from multi-decade highs after a sale of super-long-term debt showed strong demand. The yield on benchmark U.S. 10-year notes US10YT=RR rose 1.62 basis points to 4.495%, from 4.479% late on Monday.

Fed watchers will get another glimpse into how new Chair Kevin Warsh steers the central bank when it releases Federal Open Market Committee minutes on Wednesday, the first of his tenure.

In commodity markets, gold XAU= lost 0.91% at $4,125.59 an ounce, trading below a two-week high GOL/. Silver XAG= fell 2.17% to $60.73 an ounce and copper CMCU3 declined 0.58% to $13,326.00 a ton.

-Reporting by Satoshi Sugiyama; Editing by Jacqueline Wong and Lincoln Feast./Reuters