Asian and US technology stocks faced heavy selling pressure on Tuesday and Wednesday as a disappointing earnings report from Alphabet and a relentless rally in crude oil prices rattled global markets. The downturn erased early-week gains in Asia and sent the Nasdaq Composite lower, with investors growing increasingly cautious about the outlook for interest rates and corporate profits.
The sell-off was triggered by Alphabet's quarterly results, which missed revenue expectations and underscored persistent weakness in its core digital advertising business. The earnings miss sparked a sharp reassessment of Big Tech valuations, rippling across Asian markets where semiconductor and electronics stocks led the declines. Japan’s Nikkei 225 fell 1.2%, South Korea’s KOSPI lost 0.8%, and Hong Kong’s Hang Seng Tech Index dropped 1.5%. In the US, the Nasdaq Composite slipped 0.46%, with the iShares Semiconductor ETF (SOXX) falling 1.2%.
Compounding the unease, Brent crude oil approached the $100 per barrel mark for the first time in over a year, driven by OPEC+ supply cuts and elevated geopolitical tensions in the Middle East. West Texas Intermediate also climbed above $86 per barrel. The surge in energy prices reignited fears that inflation could stay higher for longer, complicating the Federal Reserve's policy trajectory. According to a Reuters poll, economists now expect the Fed to keep rates unchanged for the remainder of 2026, while CME FedWatch data priced in a 70% probability of at least a quarter-point rate increase by September.
Investor sentiment remained fragile as markets awaited further earnings from Tesla and other major tech firms. The reports are seen as a crucial test of whether massive AI investments can justify stretched valuations. The dual headwinds of slowing tech earnings and rising energy costs have prompted a broad reassessment of risk, with volatility likely to persist in the near term.
