Asian stocks drop on Middle East, AI setbacks

Hong Kong, Shanghai, Taipei, Sydney, Bangkok, Manila and Kuala Lumpur were all down on Wednesday

Asian stocks dropped on Wednesday as markets digested the lack of progress towards Middle East peace and setbacks that rattled the boom in AI technology.

Iran’s chief negotiator said on Tuesday that Washington must accept Tehran’s latest peace plan or face failure, after the US president said the truce in the Middle East war was on the brink of collapse.

Both sides have refused to make concessions and repeatedly threatened to resume fighting, but neither appears willing to return to all-out war.

Traders are now looking to China, where the U.S. president is reaching on Wednesday, with the president saying he expected a “long talk” with counterpart Xi Jinping about Iran.

Hong Kong, Shanghai, Taipei, Sydney, Bangkok, Manila and Kuala Lumpur were all down on Wednesday. Jakarta declined around 2 percent as the rupiah slumped to a record low.

The war in the Middle East has sent energy costs spiralling.

Shipping through the Strait of Hormuz – through which one fifth of the world’s oil supplies usually pass – has virtually ground to a halt.

But oil prices cooled during early Asia trade, with the international benchmark Brent crude down 0.6 percent to $107 a barrel.

Seoul showed signs of recovery after the presidential Blue House distanced itself from calls for a social tax on artificial intelligence profits.

The tech-rich Kospi had plunged 5 percent on Tuesday after a top official proposed a “national dividend” to redistribute excess corporate profits from artificial intelligence.

South Korea has said it will triple spending on AI this year, aiming to join China and the US as one of the world’s top three AI powers.