Asian stock markets steady after the AI-driven sell-off

Asian share markets and US equity futures steadied on Monday after last week's sharp sell-off, which was driven by doubts over the profitability of artificial intelligence investments and demand for computer chips. The MSCI index of Asia-Pacific shares outside Japan rose 0.8 per cent; it had fallen 4.6 per cent last week.

Japan's Nikkei climbed 2.5 per cent, South Korean shares edged higher, and Taiwan's index gained about 2.5 per cent after recording its steepest weekly fall in twenty years. Fears that the Democrats' victory in the US midterm elections could bring tighter regulation of AI and data centres added to the market turmoil, while Friday's recovery on Wall Street helped calm nerves.

Earnings reports from CoreWeave, Applied Materials and Cisco Systems are due this week and are expected to test the profitability of AI investments. Meanwhile, data released on Friday showing the United States added 165,000 new jobs in October has pushed the probability of a Federal Reserve rate rise in December to 80 per cent, according to the CME FedWatch tool. New York Fed president John Williams said inflation is too high and bringing it back to the 2 per cent target is essential.

The US dollar recorded its biggest one-day gain in five months on the jobs data, with the dollar index settling at 102.2. Brent crude eased after the US president said fresh strikes on Iran were unlikely, while Bitcoin and Ether fell on fears of new regulation.