Asian markets experienced a sharp downturn on Friday, with Tokyo’s Nikkei 225 dropping 4%. The dip was fueled by significant selling of computer chipmakers and AI-related stocks. South Korean exchanges were closed, but Taiwanese shares fell 6.5% following Taiwan Semiconductor Manufacturing Company’s announcement of a $100 billion investment in U.S. fabrication plants. TSMC shares dropped 7.3% on Friday.
AI stocks have faced pressure due to concerns over their high valuations and doubts about the sustainability of demand for computer memory and processors. Oil prices surged amid escalating conflict in the Middle East, while U.S. futures declined. The U.S. expanded its airstrike campaign against Iran on Friday, targeting infrastructure to influence Iran’s control over the Strait of Hormuz.
The Nikkei index fell to 64,141.12, approaching a one-month low, with Tokyo Electron shares sinking 8.2%. Advantest, a chip testing equipment maker, dropped 7.2%, and SoftBank Group shed 9%. The Hang Seng in Hong Kong decreased by 2% to 24,501.89, while the Shanghai Composite index fell 3.1% to 3,764.15. The S&P/ASX 200 in Australia dropped 0.5% to 8,796.70.
Stephen Innes from SPI Asset Management noted investors are shifting focus from first-half winners to underperforming areas. On Thursday, the S&P 500 decreased by 0.5%, despite three-quarters of its stocks showing gains following strong earnings reports. The Dow Jones Industrial Average fell 0.2%, and the Nasdaq composite lost 1.5%.
Notable AI stocks like Nvidia fell 2.4%, while Micron Technology reduced its annual gain to under 199% after a 5.6% drop. SanDisk fell 12.6% but remains up 494% for the year. Western Digital decreased by 9.2%, yet holds a 171% yearly increase.
Oil prices are nearing a monthly high due to concerns that conflict with Iran will disrupt tanker traffic through the Strait of Hormuz. Brent crude rose 1.1% to $85.13 per barrel, and U.S. benchmark crude increased 1.3% to $79.95 per barrel.
Mixed economic reports were released in the U.S., with retail spending falling short of expectations. However, fewer unemployment claims indicate a solid job market, and manufacturing in the mid-Atlantic region exceeded forecasts.
Early Friday trading saw the U.S. dollar fall to 162.19 yen, down from 162.38 yen. The euro rose to $1.1452 from $1.1443.