Asian equity markets fell across the board on Tuesday, unable to carry over the technology-driven rebound seen on Wall Street overnight, with South Korean chipmakers leading the declines. Meanwhile, U.S. Treasury yields remained elevated as investors awaited major technology earnings later this week for clearer market direction.

On Tuesday, South Korea's major stock benchmarks each dropped more than 4%, pacing losses across the Asia-Pacific region. The MSCI Asia-Pacific index slid roughly 1%, with 8 of its 11 sub-sectors finishing lower, and declining stocks outnumbering advancing ones by about three to one.

The weakness in Asia stood in sharp contrast to U.S. markets. In New York on Monday, the Philadelphia Semiconductor Index climbed 1.6%, snapping an eight-session losing streak, while the Nasdaq Composite rose more than 1%. NVIDIA gained 1.4% and Tesla advanced 3.8%.

During Asian trading hours, however, Nasdaq 100 futures briefly turned positive in early trade before slipping 0.1%, reflecting divided sentiment across the region.

South Korea leads declines as Asia-Pacific tech stocks come under broad pressure

Asia-Pacific technology shares weakened broadly on Tuesday, with lingering concerns over the sustainability of artificial intelligence capital spending continuing to weigh on investor confidence and blunting the lift from the prior U.S. rebound.

Chip giant SK hynix (ASX: SKHY) tumbled more than 7% on Tuesday, approaching its lowest level since April, while Samsung Electronics fell over 3%.

Data center infrastructure company Elice opened at 75,700 Korean won, a 16.35% discount to its IPO price of 90,500 won, and plunged as much as 32% intraday, further denting market sentiment.

Australia's S&P/ASX 200 index declined about 0.84%. Japan's market was not spared either, with the Nikkei 225 falling 1% and the Topix dropping roughly 0.9%.

In Japan, AI hardware and data center-related names sold off, dragging the broader technology sector into correction territory. Semiconductor packaging materials leader Resonac Holdings plunged 6.43% in a single session, while Fujikura, a key supplier of optical fiber for AI data centers, dropped 6.34%. SoftBank Group, a bellwether for technology investment, also sank 6.34%. In addition, Furukawa Electric, part of the optical communications cable sector, fell 5.42%.

Silicon wafer maker Sumco declined 4.79%, and chip equipment maker Ebara Corporation shed 4.12%. SHIFT, a software testing leader that had recently surged on strong results, also saw profit-taking and fell 4.12%.

There were also policy developments in Japan worth noting. Prime Minister Sanae Takaichi said in a social media post on Monday that she does not rule out issuing government bonds to finance the overall budget, while reiterating that she will not use special deficit-financing bonds to fill the gap created by a temporary sales tax cut. Economy and Fiscal Policy Minister Minoru Kiuchi said that, if time permits, he hopes to attend this month's Bank of Japan policy meeting, stressing respect for the central bank's legally protected independence in monetary policy making and adding that he has "never considered requesting the BOJ to postpone a vote at the meeting."

Earnings season and elevated yields pose a dual test

About 70 S&P 500 constituents are scheduled to report earnings this week, with results from technology heavyweights such as Meta Platforms drawing particular attention. Mark Haefele of UBS's Chief Investment Office said:

Earnings results will show whether strong profit growth can rebuild confidence in a stock market rally. We continue to expect solid growth and earnings to support equities, while we also see value in high-quality bonds.

In addition, moves in the U.S. Treasury market are constraining risk sentiment. The 10-year Treasury yield held near 5.13% after rising 6 basis points in the prior session, as fading safe-haven demand pushed yields higher. Australia's 10-year government bond yield rose another 5 basis points to 5.28%.

Meanwhile, political turmoil in France has added to concerns about European assets. Cost-of-living protests in France over the weekend escalated into riots and looting, sending French government bonds lower. The dollar index traded sideways near 102, while the euro rebounded slightly against the dollar. However, Thomas Hempell, head of macro and market research at Generali Investments, said:

There are few euro bulls left now. With the Iran situation still unresolved and French politics in limbo, a near-term rebound in the euro looks unlikely.

In other markets, gold extended its overnight decline, falling another 0.34% to about $4,126 per ounce.

Brent crude edged up 0.27% to $109.84 a barrel, trading in a narrow range amid the dual influence of Middle East conflict supply risks and technical resistance. Bitcoin fell 0.5% to around $81,543.