Asian stocks mixed ahead of weekend as tech recovers early losses

Asian equities experienced mixed performances on Tuesday, with tech firms managing to recover early losses on bargain-buying at the end of a challenging week. Meanwhile, traditional safe havens enjoyed a boost from a generally cautious market sentiment. Following AI-linked companies hitting record highs in June, their equity prices have been under pressure due to concerns regarding their overvaluation, excessive investments in infrastructure and hardware, and rising servicing costs.

This, coupled with a surge in oil prices above US$100, has fueled inflation, led central banks to increase interest rates, and pushed government borrowing costs to multi-decade highs. While strong earnings from companies like Meta and Lam Research have tempered some concerns, investors are now demanding improved results to justify their support.

Analysts noted that even positive news is no longer sufficient if the outlook fails to match an already high valuation. The shift away from tech has bolstered industrial companies that were previously overlooked during the AI boom. However, the general losses in New York have permeated Asian markets at the beginning of the day. Some markets, such as Seoul, have rebounded by the end of the day, while Tokyo's Nikkei 225 ended in the red but was close to earlier lows.

Safe havens, such as the yen, benefited from strong Japanese inflation data, which increased expectations of another interest rate hike.