Tech Selloff Weighs on Markets as Fed Chair, Nvidia Earnings Loom

Markets opened a consequential week in retreat. Stocks fell across Asia and futures suggested caution ahead in the US, as investors began to reckon with a question that has shadowed the artificial intelligence boom since its inception: whether the enormous sums being poured into AI infrastructure will ever actually pay off.

The pressure was most visible in the technology sector, where the giants that have driven this year's rally showed signs of strain. Samsung Electronics dropped 8.7% in Seoul after unveiling plans to return 110 trillion won—roughly $80 billion—to shareholders, a move that left investors cold rather than pleased. In Hong Kong, Alibaba fell 9.6% following news of an HK$80 billion share sale, or about $10.2 billion. SoftBank Group, meanwhile, slipped 4.9% in Tokyo after announcing a record ¥1 trillion retail bond offering worth $6.3 billion. These were not small moves. They reflected a shift in how the market was thinking about the technology sector's future.

The broader Asian Pacific index, tracked by MSCI, dropped 1% as these heavyweights dragged it lower. Treasuries, by contrast, found buyers. The US 10-year yield eased down two basis points to 4.71% as oil prices fell—Brent crude slid 1.3% to around $93.20 a barrel—and as investors positioned themselves ahead of major announcements. Gold extended gains from the previous week, trading near $4,640 an ounce and approaching a three-month high, as concerns about a weakening dollar pushed money toward traditional safe havens.

The week ahead held two events that would shape market direction. On Wednesday, Nvidia would report earnings and provide guidance on future demand for its chips. On Friday, Federal Reserve Chair Kevin Warsh would speak at Jackson Hole, Wyoming, offering his first public remarks on the path for interest rates since taking the helm. The stakes were unusually high. Nvidia's results would signal whether the artificial intelligence investment cycle still had room to run, or whether soaring hardware costs were beginning to squeeze returns. Warsh's comments would reveal whether the Fed remained more concerned about inflation—which elevated oil prices continued to stoke—or about the bond market itself, where yields had climbed to levels not seen in decades.

The market's hesitation made sense. Josh Gilbert, an analyst at eToro, captured the mood plainly: traders were simply waiting to see what Nvidia would say and what Warsh would signal before committing capital in either direction. The question animating investors was no longer whether companies should build AI infrastructure, but whether they could do so profitably. Beth Wong, an Asian equities specialist at HSBC Asset Management, noted that the narrative had shifted since July. Companies now faced pressure to demonstrate not just spending discipline, but a credible path to returns on their AI investments—a much harder sell than the simple story of building faster and buying more chips.

Elsewhere, the Canadian dollar weakened after trade talks with the United States collapsed on Friday, resulting in a 50% tariff on roughly $20 billion of Canadian goods. Prime Minister Mark Carney announced that Canada would impose counter-tariffs on $20 billion of American products beginning September 8. In Washington, Treasury Secretary Scott Bessent was preparing to unveil a fiscal consolidation plan and an economic isolation strategy targeting Iran, which he described in a Financial Times article as an "economic D-Day." Yet skepticism about the administration's fiscal intentions was already evident. The Congressional Budget Office projected large budget deficits continuing and debt rising to 120% of GDP within a decade—a trajectory that suggested spending cuts or revenue increases would be necessary to match the White House's rhetoric. As one analyst at Brown Brothers Harriman put it, without credible action on spending or taxes, the consolidation plan risked being merely cosmetic.

Corporate news added texture to the week's mood. Shein Global Holdings was seeking to raise as much as HK$13.9 billion—$1.8 billion—through a Hong Kong initial public offering, while simultaneously facing a US national security review of its purchase of the American clothing retailer Everlane. Australian fuel retailer Ampol returned to profit in the first half, with earnings more than tripling as Middle East conflict disrupted global energy markets. Bitcoin edged lower to about $77,100, while the dollar index posted its third weekly decline in four weeks. The week had begun, and the market was waiting.