Asian Tech Stocks Plunge on AI Spending Doubts, Oil Rises as Geopolitical Tensions Flare

Asian stocks declined sharply on Thursday as technology shares bore the brunt of investor concerns over artificial intelligence (AI) spending, according to reports. Geopolitical tensions, particularly in Venezuela, also sent oil prices higher, while global attention turned to central banks ready to deliver policy decisions as per market analysis. The Bank of England (BOE) was widely expected to cut interest rates, and the European Central Bank (ECB), Norges Bank, and Riksbank were set to keep rates unchanged according to forecasts.

The tech-driven sell-off extended beyond U.S. markets, with MSCI's broadest Asia-Pacific index dropping 0.5%, Japan's Nikkei falling 1.2%, and South Korea's KOSPI down 1.3% according to market data. Oracle's shares plummeted over 5% following a breakdown in a key $10 billion data center financing deal, deepening investor skepticism about AI infrastructure spending. The selloff reflected growing doubts about whether AI-driven valuations and spending could justify returns as reported.

Nasdaq futures inched higher after a steep drop the previous day, but the tech-heavy index continued to trade well below its 50-day moving average according to market updates. Oil prices rose more than 1.5% on news that U.S. President Donald Trump had ordered a blockade of sanctioned oil tankers in and out of Venezuela as announced. Gold prices neared a record high as investors sought safe-haven assets amid growing geopolitical and economic uncertainty as noted.

Central Banks and Policy Divergence

The BOE was the only central bank among the group expected to adjust policy, with a 25 basis point rate cut likely on Thursday. Recent inflation data showed consumer prices fell to 3.2% in November, the lowest since March 2025, reinforcing the case for a rate cut. The ECB, Norges Bank, and Riksbank were expected to maintain current rates, though the ECB's decision would be closely watched for any hints of future tightening or easing according to market analysis. Market watchers were also looking ahead to the U.S. Federal Bank's policy outlook, particularly with Governor Christopher Waller indicating room for rate cuts given weak labor market data as stated.

AI Jitters and Market Sentiment

The tech sector's struggles were fueled by concerns over AI spending and data center expansion costs. Oracle's latest setback-its inability to secure financing for a $10 billion data center project-triggered broader investor caution. Analysts pointed to mixed earnings, high debt, and construction delays as eroding confidence in AI-driven growth. The Nasdaq 100, which has been the engine of this year's bull market, has now fallen more than 5% from its recent peak, signaling a possible shift in market dynamics.

The selloff in tech stocks also pushed investors toward defensive assets like gold and long-dated Treasuries. While the 10-year Treasury yield remained flat, two-year yields dipped slightly as traders priced in a higher probability of future Fed rate cuts. The move highlighted a growing divide in market sentiment between those betting on a slowdown in AI growth and those expecting a more measured correction.

Geopolitical Risks and Commodities

Trump's blockade of Venezuelan oil tankers intensified concerns about energy security and geopolitical stability. U.S. crude prices climbed to $56.91 per barrel, while Brent crude rose to $60.62, extending a rebound from multi-year lows. Despite Trump's aggressive stance, Venezuela's state oil company insisted that exports were continuing normally, though sanctions and prior U.S. military actions had already curtailed oil flows. Analysts noted that Venezuela's oil production had fallen sharply due to years of underinvestment, limiting the potential for a long-term price spike.

Gold prices hovered near a record high as investors sought refuge from the combination of AI sector volatility, central bank uncertainty, and geopolitical risks. The metal's performance underscored broader market anxieties, particularly in the lead-up to key policy decisions and U.S. inflation data release. The U.S. dollar index held steady, indicating no immediate shifts in currency demand amid the uncertainty.

As the week drew to a close, markets braced for a flurry of central bank decisions and geopolitical developments. With oil prices rising, tech stocks under pressure, and rate expectations shifting, investors appeared to be preparing for a turbulent holiday trading period. The convergence of AI doubts, policy divergence, and geopolitical tensions was creating a complex backdrop for global markets.