Asian Stocks Claw Back After AI Rout, But Traders Aren't Relaxing Yet

Asia's markets wobbled back into green on Monday (Nov 9), a day after a brutal week that saw chip-fuelled panic rip through the region's tech-heavy indexes. MSCI's broadest Asia-Pacific gauge outside Japan climbed 0.8%, recovering a sliver of the 4.6% it shed last week. Japan's Nikkei jumped 2.5%, Korean shares posted small gains, and Taiwan's benchmark added roughly 2.5% — a modest bounce after its heaviest weekly fall in two decades. US equity futures, the S&P 500 e-minis, also edged higher.

The wreckage traced back to a nasty cocktail: doubts about whether AI spending will ever pay off, rising interest rates, and Democratic wins at the US midterms that stoked fears of tougher regulation for AI and data centres. Wall Street rallied on Friday to close out the chaotic stretch, offering some relief. Even so, Capital.com senior analyst Kyle Rodda told the market not to exhale. Regulatory risk is up, earnings season has underwhelmed, and the Magnificent Seven missed expectations — meaning, he said, momentum is still tilted downward.

The next stress test arrives this week. CoreWeave, Applied Materials and Cisco Systems all report earnings, giving investors a hard look at whether AI profits can justify the enormous build-out costs. And according to a company-led investigation, Nvidia is probing CEO Jensen Huang's relationship with someone described as an alleged Chinese spy — a thread that could bring fresh volatility to the sector's bellwether.

Oil cooled after US President Donald Trump said Sunday he was highly unlikely to order new strikes on Iran as long as talks to end the conflict keep moving. Brent crude slid to $97.49 a barrel. On the currency side, a blowout US jobs report — 165,000 positions added last month, more than double what economists expected — handed the dollar its biggest single-day gain in five months. The dollar index sat at 102.2, the euro barely budged at $1.1148, and the yen firmed 0.2% to 158.215.

That jobs number has traders pricing in a Federal Reserve hike. Expectations for at least a 25-basis-point increase in December climbed to nearly 80%, per the CME FedWatch Tool, and a US CPI reading due Tuesday could seal the deal. New York Fed President John Williams added fuel, saying growth has stayed remarkably resilient through successive shocks but inflation is still too high and must come back to 2%.

Crypto took the hardest knock. Bitcoin dropped more than 2% to $73,708, while ether tumbled about 5% to $2,223 — its weakest level in over two months — as investors braced for a Democratic-controlled US Congress to tighten the screws on digital assets.