Investing.com-- Asian stocks moved in a flat-to-low range on Tuesday, with Japanese markets leading losses as local chipmaking stocks were battered by concerns over a recently launched Chinese artificial intelligence model.
Markets in China and South Korea were closed for the Lunar New Year holiday, with regional trading volumes expected to remain dull through the week on several more regional holidays.
Hong Kong markets firmed slightly ahead of an early close.
Asian markets took a weak lead-in from Wall Street, where the NASDAQ Composite slumped over 3% on heavy losses in technology stocks. Market major NVIDIA Corporation (NASDAQ:NVDA) wiped out nearly $600 billion in value within a day, its worst ever drop.
But the sell-off now appeared to be showing signs of slowing, with U.S. stock index futures steadying in Asian trade.
Beyond DeepSeek, focus this week is also on a string of major U.S. tech earnings due in the coming days. The Federal Reserve is also set to hold interest rates steady at the conclusion of a meeting on Wednesday.
Nikkei falls as DeepSeek concerns batter chipmakers
Japan’s Nikkei 225 index was the worst performer in Asia on Tuesday, losing nearly 1%, while the TOPIX index rose slightly.
The Nikkei was pressured chiefly by losses in major chipmaking stocks, with Nvidia supplier Advantest Corp. (TYO:6857) losing as much as 10%. Tokyo Electron Ltd. (TYO:8035) and Renesas Electronics Corp (TYO:6723) fell between 2% and 4%, while tech conglomerate SoftBank Group Corp. (TYO:9984) lost 4.7%.
DeepSeek sparked a rout in global chipmaking stocks, as its R1 model appeared to match the performance of rivals such as ChatGPT while using much older hardware and lower production costs.
The model sparked questions over the need for billions of dollars being invested in advanced AI chips and data center infrastructure, when companies could instead build leaner and more efficient AI models.
Such a scenario would greatly undermine the otherwise outsized AI-fueled demand enjoyed by chipmakers over the past two years.
Losses in Chinese tech stocks were much less pronounced, with Hong Kong’s Hang Seng index rising 0.2% in holiday-thinned trade. Local internet heavyweights, including Baidu (NASDAQ:BIDU) Inc (HK:9888), Xiaomi Corp (HK:1810), Tencent Holdings Ltd (HK:0700), and Alibaba Group Holding Ltd (HK:9988), rose between 1% and 5% on Tuesday, extending sharp gains from the prior session amid increased optimism over China's AI capabilities.
Australian stocks muted before CPI data
Australia’s ASX 200 moved little on Tuesday amid increased caution before key fourth-quarter consumer price index inflation data due on Wednesday.
The reading is likely to factor into expectations for interest rate cuts by the Reserve Bank of Australia, amid growing conviction that a cut could come as soon as February.
But Australian inflation has remained largely sticky in recent quarters, raising doubts over just how much headroom the RBA has to lower rates. The central bank has also given scant cues on its plans to cut rates.
Among broader Asian markets, futures for India’s Nifty 50 index pointed to a positive open, with local stocks set for some recovery after tumbling to a more-than seven-month low on Monday.