Asian markets experienced a sharp decline on Friday, primarily driven by heavy selling in the computer chipmaker and artificial intelligence sectors. Tokyo’s Nikkei 225 faced a significant drop of 4%, impacted by pressure on stocks associated with AI. South Korean markets remained closed, while Taiwan’s market saw a 6.5% decrease following the announcement from Taiwan Semiconductor Manufacturing Company (TSMC) about its planned $100 billion investment in US fabrication plants. TSMC’s shares fell by 7.3%.
Concerns have been mounting around AI-related stocks, as investments in computer memory and processors may not yield expected profits and productivity gains. Oil prices rose significantly due to escalating conflict in the Middle East. Meanwhile, US futures saw declines following a military campaign by the US against Iranian infrastructure, including a bridge and a tower.
The Nikkei experienced a 4% loss, trading near a low not seen in over a month. Tokyo Electron, a manufacturer of chip equipment, dropped 8.2%, while Advantest, a chip testing equipment maker, fell 7.2%. SoftBank Group shares decreased by 9%. The Hang Seng index in Hong Kong fell 2%, and the Shanghai Composite index dropped 3.1%. In Australia, the S&P/ASX 200 declined by 0.5%.
Stephen Innes of SPI Asset Management noted investors shifting their focus from early-year gainers to other areas. On Thursday, the US stock market showed mixed results. The S&P 500 fell by 0.5%, despite positive earnings reports from major companies. The Dow Jones Industrial Average dipped 0.2%, and the Nasdaq composite lost 1.5%, affected by Nvidia’s 2.4% decline. Other AI stocks also saw reductions. Micron Technology fell 5.6%, SanDisk shed 12.6%, and Western Digital declined 9.2%.
Oil prices approached their highest levels in a month, driven by concerns about Iranian conflicts potentially affecting oil tanker routes through the Strait of Hormuz. Brent crude increased by 1.1% to $85.13 per barrel, while US benchmark crude rose 1.3% to $79.95 per barrel.
Recent US economic reports were mixed. Retail sales fell short of expectations, while unemployment claims were lower, indicating a stable job market. Manufacturing in the mid-Atlantic region exceeded expectations. Early Friday, the US dollar weakened to 162.19 Japanese yen, and the euro strengthened to $1.1452.
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