Asian Markets Decline as AI Stock Doubts Persist

Major Asian stock markets largely fell on Wednesday, with South Korea’s Kospi index experiencing a significant drop of over 8% as investor confidence wavered regarding the sustainability of massive artificial intelligence investments.

The downturn was particularly sharp for chipmaker SK Hynix, whose shares plummeted 12.6% after its quarterly operating profit, despite a sixfold increase to a record $41.2 billion, fell short of analyst expectations. Samsung Electronics also saw its stock fall by 8%.

By midday in Seoul, the Kospi had fallen 8.2% to 5,531.56, its lowest level since early April after recently surpassing 9,000.

Other Asian markets followed a similar trend. In Tokyo, the Nikkei 225 lost 1.8%, reversing earlier gains. Japanese stocks showed a mixed reaction to a recent earthquake that impacted the southern Kyushu region, where a previous quake had caused significant disruptions for manufacturers. Shares of Nippon Paper, which owns a mill in the affected area, fell 1%.

Taiwan's Taiex shed 3.6%, and the Shanghai Composite index in China declined 0.5%. In contrast, Hong Kong's Hang Seng index rose 1.7%, and Australia's S&P/ASX 200 added 1%.

Meanwhile, oil prices rebounded, with Brent crude jumping 4.2% to $87.58 a barrel and benchmark U.S. crude rising by the same margin to $82.58, recovering from a two-month high.

On Tuesday, Wall Street showed mixed performance. The S&P 500 gained 0.2%, and the Dow Jones Industrial Average rose 1%, while the Nasdaq composite slipped 0.2%. U.S. stock gains were bolstered by stronger-than-expected corporate earnings reports, such as Coca-Cola's 5% increase following a 7% rise in revenue.

However, market sentiment was tempered by concerns over the valuations of companies heavily invested in the artificial intelligence boom. Micron Technology, which had seen its stock more than triple for the year, sank 8.9%. Advanced Micro Devices and Applied Materials also experienced declines of 8.1% and 7.8%, respectively.

In currency markets, the U.S. dollar weakened against the Japanese yen, trading at 163.57 yen, and edged slightly lower against the euro, which stood at $1.1399.