Citrini-Fueled AI Scare Trade Eases as Stocks Rise: Markets Wrap

(Bloomberg) — The artificial intelligence-driven “scare trade,” fueled by concern over the impact of the technology on companies, showed signs of cooling as Asian shares and US equity-index futures advanced.

Asian equities inched up, bucking US weakness, and sentiment appeared to firm up with contracts for the S&P 500 rising 0.2%. European shares were also set for a stronger open. SK Hynix Inc., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. all jumped to records as traders piled into chipmakers, viewing them as the “picks and shovels” of the AI supply chain.

As risk appetite improved, gold slipped following a four-day rally. Treasuries pared gains from the US session, when investors had sought traditional haven assets. Bitcoin fell to trade around $63,000, while the Bloomberg Dollar Spot Index rose about 0.1%.

The moves in Asia — where markets have outperformed the US this year and largely sidestepped tech-led declines — came after US gauges fell on Monday. Tech, delivery and payment shares slid following a Citrini Research report outlining potential AI risks across industries. The weakness was compounded by lingering uncertainty over President Donald Trump’s tariffs.

“The AI scare trade cutting through US markets is a displacement story, with generative AI repricing the revenue models of enterprise software, professional services, and wealth management platforms,” said Christopher Forbes, head of Asia at CMC Markets. “Asia’s equity indices carry almost none of that exposure. The decoupling has already begun.”

The so-called AI scare trade has become a dominant market theme, with selling spreading beyond software to hit US insurance brokers, private credit firms, cybersecurity names and even real estate services stocks.

Read: Citrini’s Dystopia Fuels Asia’s Breakaway From Global AI Gloom

In comparison, Asian shares have outperformed in 2026, with MSCI’s regional gauge rising 12% this year, while the S&P 500 Index has been little changed. That marks the Asian index’s strongest start to a year relative to the US benchmark on record as investors bet the region’s chipmakers stand to benefit from supplying the AI buildout.

Shares in South Korea rose 2% and Taiwan jumped 2.7%. China also gained on its return from Lunar New Year holidays, helping the broader MSCI Asia Pacific Index erase earlier losses to advance 0.2%.

This trend looks likely to persist for a while, said Carmen Lee, head of equity research at Oversea-Chinese Banking Corp.

“In the first two months of the year, we’ve seen a more deliberate allocation toward Asia and emerging markets,” said Mohit Mirpuri, a senior partner at SGMC Capital Pte. “This doesn’t necessarily signal a structural decoupling, but it does suggest that global portfolios are broadening exposure beyond the narrow US tech concentration trade.”

Elsewhere, Trump’s new 10% global tariffs went into effect on Tuesday, kicking off a White House effort to preserve the president’s trade agenda after the Supreme Court struck down his original sweeping duties.

The US is also readying a spate of additional national security investigations that would enable Trump to impose new tariffs, as the administration seeks to rebuild his global tariff regime.

What Bloomberg strategists say…

Asian investors continue to believe that companies providing pick-and-shovel services for the AI race will reap rewards with a Bloomberg semiconductor gauge roaring ahead. Indeed, momentum for the leading names in the region is so strong that even Nvidia’s earnings event this week would need to be very messy to blunt this advance.

— Mark Cranfield, MLIV. For full analysis, click here.

While traders were dealing with the confusion surrounding tariffs, concerns about AI disruptions erupted again. International Business Machines Corp. plunged the most in 25 years. It began after a bearish report was published over the weekend by a little-known firm called Citrini Research.

Alap Shah, co-author of the Citrini report that warned of potential tech disruption, said in a Bloomberg TV interview that chipmakers, data centers and foundation-model labs stand out as key beneficiaries of the AI trade.

At risk are intermediation businesses like insurers and banks. His firm had short positions in some of the companies cited in the report, Shah said, while owning “a lot” of semiconductor stocks poised to benefit.

“We generally have a set of shorts out against businesses that we think are going to be disrupted by AI,” he said. “On the other side of that, we own a lot of semiconductors that we think are going to benefit.”

Corporate Highlights:

JPMorgan Chase & Co. expects to earn about $104.5 billion in net interest income this year, more than it anticipated just last month when it reported quarterly earnings. PayPal Holdings Inc., the digital payments pioneer, is attracting takeover interest from potential buyers after a stock slide wiped out almost half of its value, according to people familiar with the matter. Merck & Co. is splitting its main pharmaceutical unit in two in an effort to better highlight the parts of the business that are growing, as it stares down a patent cliff for its best-selling cancer drug Keytruda. Paramount Skydance Corp. raised its offer to buy Warner Bros. Discovery Inc., extending the long-running battle for one of Hollywood’s iconic studios. FedEx filed a lawsuit in the US Court of International Trade seeking a “full refund” for duties it paid to the US government as a result of President Trump’s emergency tariffs. European car sales fell in January, breaking a six-month growth streak as consumer reticence in several markets overshadowed still-robust demand for electrified models. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 6:50 a.m. London time Nasdaq 100 futures rose 0.3% The MSCI Asia Pacific Index rose 0.2% Hong Kong’s Hang Seng fell 1.9% Euro Stoxx 50 futures rose 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1779 The Japanese yen fell 0.3% to 155.05 per dollar The offshore yuan was little changed at 6.8906 per dollar The British pound was little changed at $1.3488 Cryptocurrencies

Bitcoin fell 2.2% to $63,174.81 Ether fell 2% to $1,826.54 Bonds

The yield on 10-year Treasuries advanced one basis point to 4.04% Japan’s 10-year yield was unchanged at 2.105% Australia’s 10-year yield declined two basis points to 4.69% Commodities

Spot gold fell 1.1% to $5,171.55 an ounce West Texas Intermediate crude rose 0.6% to $66.70 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Bernadette Toh, Gabrielle Ng and Abhishek Vishnoi.

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