Asian equities brace for weaker open after chip selloff

Asian equities headed for a weaker open after chipmakers pulled US stocks lower while cheaper oil eased inflation pressure before the Fed.

Index futures signaled steep early losses in Japan and South Korea, while Australia was set for a smaller decline. A US chip-stock measure lost 2.2%, leaving the S&P 500 nearly flat even though more stocks rose than fell.

Chip stress reaches Asia

The pressure is centered on the artificial intelligence supply chain, where investors are testing whether the largest technology buyers can defend the scale of their spending. Credit-default protection on Nvidia Corp. debt climbed during a wave of AI-related transactions valued at more than $750 billion, according to the market moves described in the source material.

SK Hynix Inc. added to the regional pressure after its shares fell below their US initial public offering price. ASML Holding NV also declined after a report said a Chinese state-backed company is producing some chipmaking equipment that could compete with the Dutch group’s machines.

Oil retreat eases yields

Energy markets moved in the opposite direction from chip stocks. US oil traded under $82 a barrel, while Brent finished near $88 after recording its sharpest one-day fall in more than three months on Monday.

The drop followed a third straight day without US attacks on Iran, reducing the inflation premium that had built into crude. Bond yields fell as traders looked toward Wednesday’s Federal Reserve decision, with investors broadly expecting no change in rates but watching whether officials keep another increase on the table.

"This is a week with more than its fair share of potential surprises, good and bad,"

Chris Larkin at E*Trade from Morgan Stanley said, pointing to geopolitics, oil and AI spending as the main sources of market volatility.

Trump talks frame crude path

President Trump said the US and Iran were holding diplomatic talks aimed at ending the conflict, while warning that military action could resume if no agreement emerges. "There’s a good chance that something could happen. If it doesn’t, we go back to doing what we were doing," Trump told reporters.

Iran and Oman are also trying to reach terms to restart shipping through the Strait of Hormuz, according to people familiar with the matter. Any progress there would matter for oil because shipping risk feeds directly into freight costs, crude prices and inflation expectations.

If the pause in attacks holds and shipping normalizes, lower oil would ease pressure on global inflation and bond yields. For Nvidia, that would remove one macro headwind, but it would not answer the harder question of whether AI infrastructure spending can generate enough returns; for the chip sector, earnings guidance would become the cleaner test.

If talks fail and crude reverses higher, the mechanism runs the other way: higher energy prices could lift inflation expectations, pressure rate-sensitive equities and make expensive AI shares harder to defend. In that path, Nvidia’s debt hedges and ASML’s China exposure would remain focal points for investors assessing whether the AI trade is still broadening or narrowing.