A look at the day ahead in European and global markets from Tom

Westbrook

Chip stocks tanked across Asia on Tuesday, spooked by the

twin threats of rising Chinese competition and mounting

questions about the funding and longevity of the AI

infrastructure boom.

South Korea's KOSPI fell nearly 10% and tripped a

circuit breaker, and Japan's Nikkei fell 4.4%. Both

markets have done so well in the rally that they are still

year-to-date leaders, though they now scrape multi-month lows.

On Monday, Nvidia ( NVDA ) slid 5% on a Wall Street Journal

report that the chipmaker was in talks to provide roughly $250

billion in financing guarantees for an OpenAI data centre.

The report said the guarantee would not cover Nvidia ( NVDA ) chips

inside the centre, but that financing OpenAI chip purchases

worth up to $350 billion was also under discussion, throwing a

spotlight on the increasingly circular nature of AI build-out

spending.

Europe's chip champion was not spared either. ASML

slumped 8.5% after The Information reported that China has begun

producing domestically developed immersion deep ultraviolet

lithography machines, a critical chipmaking technology long

dominated by the Dutch group.

That development, coupled with the stellar debut of CXMT

Corp, has investors wondering whether China's

semiconductor industry is moving from catch-up mode to genuine

contender status. CXMT rocketed to the top of China's stock

market by valuation on Monday, fanning worries that dominant

chip makers may need to share the AI spoils more widely.

Reuters reported last week that Apple ( AAPL ) had sought U.S.

assurances that CXMT wouldn't be added to a trade blacklist.

Earnings at Apple ( AAPL ), Meta, Microsoft ( MSFT ) and

Amazon ( AMZN ) later this week will round out the picture on

hyperscaler spending plans.

Tumbling oil prices, meanwhile, were little salve for stocks

or even for bonds, which held steady through Tuesday's Asia

session even as crude futures extended losses.

Markets see a roughly 38% chance of a U.S. rate hike this

week.

Key developments that could influence markets on Tuesday:

Economics: France consumer confidence, U.S. consumer

confidence

Earnings: Mercedes-Benz, Barclays, Man Group,

EssilorLuxottica, Logitech, Rio Tinto, Kering, Ford, Mondelez,

Visa, NXP, Seagate, Coca-cola, UPS, Boeing

(Editing by Shri Navaratnam)