Caution before a string of regional economic readings also weighed, as did fears of a potentially hawkish Bank of Japan later this week

Most Asian stocks dropped on Tuesday, extending recent losses as the technology sector saw little respite from concerns over stretched artificial intelligence valuations.

Caution before a string of regional economic readings also weighed, as did fears of a potentially hawkish Bank of Japan later this week.

Nikkei 225 and TOPIX indexes dropped between 1% and 1.3% on Tuesday, pressured by losses in tech and broader sectors.

Markets turned cautious towards Japan in anticipation of potentially hawkish signals from the BOJ, when it meets later this week.

Investors were on guard over a potential rate hike, especially after BOJ officials signalled they will consider raising interest rates amid recent rise in inflation.

Before the BOJ’s decision, key Japanese CPI inflation data is also due this week.

Japanese markets took little support from purchasing managers index data showing a mild improvement in manufacturing activity, while growth in services cooled slightly.

Tech-heavy Asian bourses remained the worst performers in the region, with KOSPI and Hang Seng losing nearly 1.7% apiece. Losses in tech also weighed heavily on Nikkei, while TSMC, the world’s biggest chipmaker, declined 1.4% in Taiwan trade.

Tech remained on the backfoot amid growing questions over massive AI-fuelled valuations.

Sectors beyond tech also pulled back. Shanghai Shenzhen CSI 300 and Shanghai Composite indexes shed nearly 1% each, pressured by concerns over the world’s second-largest economy following a string of weak readings for November.

Renewed fears of a real estate debt crisis, as major developer China Vanke races to restructure its debt, also weighed on markets.

ASX 200 declined 0.4% after a private survey showed consumer sentiment deteriorated sharply in early-December, on concerns over rising inflation and steady interest rates.