Asian stocks rout on AI worries

Asian stocks extended a brutal sell-off on July 29, 2026, driven by anxiety over artificial intelligence valuations, rising competition, and spending ahead of crucial earnings from big tech firms and a US United States — Federal Reserve policy decision. Oil prices jumped after Iran launched multiple ballistic missiles that were intercepted by US Central Command, escalating tensions in the US-Iran war and raising concerns about oil supply disruptions through the Strait of Hormuz. South Korea's KOSPI fell 5%, reversing earlier gains after sinking more than 10% to a three-month low on Tuesday, despite strong earnings from SK Hynix. Shares of SK Hynix fell 9% as investors digested earnings that showed the chipmaker increased quarterly operating profit more than sixfold but missed lofty expectations. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 1% after shedding 3.6% on Tuesday and was set for a monthly drop of 8%. Japan's Nikkei fell 1% and is bracing for a more than 10% drop in July. Earnings from Microsoft and Meta later in the day will be a key test of the AI trade, particularly after Alphabet and Tesla spooked investors last week with negative cash flow reports. The United States — Federal Reserve's policy decision is due later on Wednesday, with traders pricing in a 33% chance of a rate hike under new Chair Kevin Warsh. Brent crude jumped 3% to $86.80 per barrel and WTI rose more than 3% to $81.95 after the missile attack. Iran effectively shut the Strait of Hormuz to ships other than its own after the US and Israel launched strikes on February 28. A deal last month between Washington and Tehran partially reopened it, but the agreement collapsed in early July after Iran fired on ships using a channel it had not approved.