Profit-taking hits Asian technology stocks
The pattern remains unchanged: strong market sessions, such as Monday's rally, are increasingly being used by investors to lock in profits, particularly in AI and semiconductor stocks.
Asian equity markets felt the full force of this renewed selling pressure overnight, with technology shares dragging the major indices in both Japan and South Korea sharply lower.
Japan and South Korea fall sharply
Japan's Nikkei 225 fell by more than 3% at one stage, while South Korea's Kospi plunged by over 10%, weighed down by heavy losses in index heavyweights Samsung Electronics and SK Hynix.
Against this backdrop, the DAX is proving relatively resilient and is expected to open only modestly lower, once again benefiting from its comparatively limited exposure to large-cap technology stocks.
AI valuations remain under scrutiny
Declining energy prices are offering only limited support to equity markets. Investors remain increasingly sceptical that highly valued AI-related technology companies will be able to deliver the ambitious earnings and revenue growth currently reflected in their valuations.
LVMH and Mercedes-Benz support the earnings focus
Meanwhile, the European earnings season is gathering momentum. LVMH, one of Europe's most influential companies, reported quarterly results after Monday's close that exceeded analysts' expectations, leaving the luxury goods group's shares modestly higher in early trading.
