Asian shares are mixed, US futures edge higher as AI fears drag Wall Street lower

Asian Markets Mixed as AI Concerns and Geopolitical Tensions Weigh on Investors

Asian markets showed mixed performance Friday as investors grappled with mounting concerns over artificial intelligence investments and escalating tensions between the United States and Iran, adding volatility to an already cautious trading environment.

The Tokyo market saw significant declines, with the Nikkei 225 falling 1.1% to close at 56,825.70. Financial institutions faced particular pressure amid growing worries about their exposure to private credit companies that have lent to businesses potentially vulnerable to AI disruption. Mitsubishi UFJ Financial Group, which maintains a partnership with Blue Owl Capital, saw its shares drop 2.2% after Blue Owl tumbled 5.9% in U.S. trading the previous day.

Other Japanese market heavyweights also suffered losses, with Toyota Motor Corporation falling 3.7% and Sony shedding 3.2%, contributing to the broader market decline.

In Hong Kong, the Hang Seng index retreated 0.8% to 26,481.67 as trading resumed following Lunar New Year holidays. Markets in mainland China and Taiwan remain closed until next week, limiting regional trading volume.

By contrast, South Korea’s Kospi surged 2.3% to establish a new record of 5,808.53, propelled by defense contractors benefiting from increased global military spending. Hanwha Aerospace led the gains with a remarkable 6.4% jump, exemplifying the sector’s strength amid geopolitical uncertainties.

Elsewhere in the region, Australia’s S&P/ASX 200 edged marginally lower by 0.1% to 9,081.40, while India’s Sensex added 0.7%. Thailand’s SET index declined 0.7%.

The mixed performance in Asia followed a downward session on Wall Street, where all major indices closed lower. The S&P 500 slipped 0.3%, the Dow Jones Industrial Average dropped 0.5%, and the Nasdaq composite lost 0.3%.

Oil prices continued their upward trajectory, reaching their highest levels since early August. The increase comes as both the United States and Iran signal readiness for conflict if diplomatic efforts regarding Tehran’s nuclear program fail to progress. U.S. benchmark crude rose to $66.71 per barrel, while Brent crude, the international standard, reached $72.01 per barrel early Friday.

The rising oil prices could complicate the Federal Reserve’s interest rate strategy, potentially delaying further cuts. Fed officials have indicated they want to see further evidence of declining inflation before implementing additional rate reductions this year.

Recent economic reports present a mixed picture of the U.S. economy. While manufacturing growth in the mid-Atlantic region is accelerating, and unemployment benefit applications have decreased—suggesting a slowing pace of layoffs—the U.S. trade deficit widened in December more than economists had anticipated.

Among individual stocks, companies facing potential AI disruption experienced notable declines. Booking Holdings dropped 6.1% despite reporting better-than-expected profits. The company has lost approximately a quarter of its value this year as investors worry about AI-powered competitors. Similarly, Carvana fell 7.9% despite strong quarterly results.

Walmart showed volatility, initially gaining 2.7% on stronger-than-expected quarterly results before reversing course to close down 1.4%. The retail giant’s profit forecast for the upcoming year fell short of analyst estimates, dampening investor enthusiasm.

In the cryptocurrency market, Bitcoin rose 1.1% to nearly $68,000, while precious metals also saw gains, with gold up 0.8% and silver increasing 1.4%.

Currency markets showed modest movements, with the dollar rising to 155.09 Japanese yen from 154.99 yen, while the euro slipped slightly to $1.1763 from $1.1775.

As investors navigate this complex landscape, the interplay between technological disruption, geopolitical tensions, and central bank policies continues to shape market sentiment across the Asia-Pacific region and beyond.