US stock futures plunged as much as 2.5 percent on Tuesday, signalling a weak start for Wall Street, as a sharp sell-off in technology shares spread from the United States to Asia. The selling pressure in tech stocks raised fresh concerns about the sustainability of the artificial intelligence (AI)-driven rally that has powered global equities this year.
Nasdaq 100 futures fell 2.5 percent, while S&P 500 futures declined 1.3 percent in pre-market trading. Dow Jones futures were relatively resilient, falling around 0.6 percent. The weakness followed a decline in US equities overnight, when the Nasdaq Composite dropped 1.3 percent and the S&P 500 ended lower as investors sold megacap technology stocks.
The trigger for Tuesday's rout came from South Korea, where the benchmark Kospi index crashed 10 percent and trading was briefly halted after heavy selling in chipmakers SK Hynix and Samsung Electronics. Shares of both companies plunged more than 12 percent following reports that SK Hynix may slow the expansion of AI memory-chip production and increase its focus on conventional DRAM products. The sharp decline rattled sentiment across the global technology sector, particularly companies linked to the AI investment boom. A gauge of Asian tech stocks fell as much as 5 percent, snapping an eight-session winning streak.
Investors have increasingly questioned whether the massive spending on AI infrastructure will generate returns sufficient to justify soaring stock valuations. The AI trade has been one of the strongest drivers of global equity markets in 2026, helping major indices reach record highs despite geopolitical tensions and elevated interest rates.
Market participants are now turning their attention to Micron Technology's quarterly earnings due later this week. The results are expected to provide crucial insights into demand for AI-related memory chips and the broader outlook for data-centre spending.
Concerns over stretched valuations and crowded positioning have also resurfaced. SK Hynix shares had surged nearly 350 percent this year before Tuesday's collapse, while margin borrowing by South Korean retail investors recently hit a record high, highlighting signs of speculative excess.
The technology-led weakness overshadowed easing geopolitical concerns. Oil prices edged lower after the United States reportedly issued a 60-day licence allowing Iran to continue selling oil internationally, a move seen as supportive of ongoing US-Iran peace negotiations. Brent crude traded below $77 per barrel.
European stocks were also swept up in the technology-led selloff, though losses were less severe than those seen in Asia. The Stoxx Europe 600 index fell 0.92 percent in early trade, as weakness in chip and technology shares spread across global markets. The broader risk-off mood also weighed on emerging markets, with the MSCI Emerging Markets Index declining 3.7 percent as investors pared exposure to growth-oriented equities.
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Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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