Asia stocks tumble as AI spending concerns deepen; BOJ holds rates

Asian equity markets fell sharply as investor concerns over the pace and payback of artificial intelligence capital spending intensified, while the Bank of Japan kept its policy rate unchanged. The selloff transmits primarily through risk appetite and equity valuation channels, as doubts about returns on large AI-related capex pressure technology-heavy indices that had led regional gains. The Bank of Japan's hold keeps the policy rate gap with the United States wide, sustaining yen weakness pressure and supporting carry-trade flows, though the central bank's stance also leaves Japanese bond yields and the currency sensitive to any shift in guidance. Semiconductor and AI hardware names, along with export-oriented Japanese and Korean equities, appear most exposed given their direct linkage to hyperscaler spending plans. Traders will watch the next Bank of Japan press conference and guidance on rate hikes, alongside U.S. Nvidia-linked earnings expectations, as the key catalysts for whether AI-spending doubts persist.

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