Asian markets slide on Iran tensions, AI investment fears

October 19, 2026 (MLN): Asian markets declined on Monday, with Japanese and South Korean equities leading regional losses as renewed tensions involving Iran and growing concerns over artificial intelligence (AI) investment weighed on investor sentiment.

Japan’s Nikkei 225 fell 1.65%, while the Topix declined 1.12%. South Korea’s Kospi lost 1.29%, and the Kosdaq dropped 0.93%. Mainland China’s CSI 300 slipped 0.28%, while Australia’s S&P/ASX 200 advanced 0.37%. Hong Kong markets remained closed for a holiday, according to CNBC.

Market sentiment weakened after a senior Iranian security official said Tehran had prepared a new military response strategy in case of further US-Israeli strikes.

The warning came amid reports of attacks on commercial vessels in waters surrounding the Arabian Peninsula, raising concerns over regional security and potential disruptions to energy supplies.

Investor concerns also intensified following a sharp sell-off in US equities last week. The S&P 500 declined nearly 2%, marking its steepest weekly loss since late June, while the Nasdaq fell 4.5%, ending its four-week winning streak.

Doubts over the sustainability of AI-related spending added to market pressure after reports that Anthropic generated $16.8 billion in third-quarter revenue, compared with $11.6 billion in the second quarter. The figures prompted investors to reassess the pace of growth in the AI sector.

CoreWeave, a debt-funded data centre operator serving technology companies, fell 25% last week, its largest weekly decline since November 2025. Investor concerns extended to the credit market, where the company’s credit default swaps reached distressed levels.

Goldman Sachs traders also highlighted widening credit spreads among AI-related companies and major technology firms, pointing to growing concerns over the sustainability of capital expenditure, financing requirements and returns on investment as AI spending growth potentially slows.

Oil markets remained in focus amid escalating maritime security concerns in the Persian Gulf and attacks on energy infrastructure in Russia and Ukraine.

Ukraine struck an oil terminal in St. Petersburg on Sunday, while longer-dated oil futures rose on expectations that energy infrastructure disruptions could persist into 2027. Brent and West Texas Intermediate crude futures, however, were trading slightly lower on Sunday.

Investors are now turning their attention to upcoming earnings from major companies, including Meta Platforms and Tesla, for indications of whether corporate results can help stabilize market sentiment.

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