Asia stocks slip as chipmakers retreat; earnings, central bank meetings loom

Asian stock markets experienced a slight decline on Monday, driven by doubts about the longevity of AI spending in semiconductor companies. Concurrently, traders prepared for a series of corporate earnings reports and central bank announcements throughout the week. Wall Street closed lower on Friday due to rising energy costs and apprehensions surrounding AI trade.

In Asia, the tech-focused Nasdaq index inched down in early trading. Japan's Nikkei 225 and the broader TOPIX index both slipped by 0.4% and 0.2%, respectively. Renesas Electronics and Tokyo Electron each saw declines of over 3%. South Korea's KOSPI index dropped 1%, accompanied by a 1.3% decline in Samsung Electronics shares. In China, the CSI 300 index decreased by 0.6%, while the Shanghai Composite slipped 0.2%.

Hong Kong's Hang Seng index edged up 0.5%, however, most regional chipmakers suffered losses. SMIC's shares fell 2.3%, and Hua Hong Grace Semiconductor dropped more than 5%. This downturn followed a recent sell-off in U.S. technology stocks, fueled by questions about whether significant investments in AI infrastructure would yield profitable returns.

Investors are eagerly awaiting quarterly earnings from major U.S. tech firms like Microsoft, Alphabet, and Amazon, hoping to gauge if increased spending on data centers and computing capacity is yielding sustainable revenue growth and profits. Additionally, Asia is set to embark on its most active earnings season, with approximately 550 out of the 1,200 companies in the MSCI Asia-Pacific index scheduled to report results.

South Korean memory-chip manufacturers SK Hynix and Samsung Electronics are among the key focus of investors. Meanwhile, India's Nifty 50 slipped 0.7%, while Singapore's Straits Times Index fell 0.5%. Australia's S&P/ASX 200 increased by 0.2%, while New Zealand's NZX 50 rose 0.1%. The U.S. Federal Reserve, European Central Bank, and Bank of Japan are all set to release policy decisions this week.

The Federal Reserve is expected to maintain interest rates, although traders will closely examine its guidance for insights into future borrowing costs, especially as high oil prices complicate inflation projections. Oil prices eased on Monday, following a surge to six-week highs last week due to Houthi militant attacks on Saudi Arabia, raising concerns about potential supply disruptions.