Asian Markets Mostly Decline Amid Geopolitical Tensions, Tech Stock Sell-off

Asian shares were largely lower on Thursday, with significant declines in South Korea and Japan, while oil prices dipped despite ongoing exchanges between the United States and Iran. U.S. stock futures showed slight gains.

Selling pressure on artificial intelligence-related shares impacted benchmarks in South Korea and Japan. In South Korea, the Kospi index tumbled 6.6% to 6,816.70, its steepest drop since 2023. This decline was partly attributed to an interest rate hike by the Bank of Korea, aimed at curbing inflation exacerbated by the Iran conflict. Major chipmakers SK Hynix and Samsung Electronics saw significant drops of 11.2% and 8.2%, respectively.

Tokyo's Nikkei 225 fell 2.9% to 66,767.64. Japanese memory chipmaker Kioxia plummeted 13.5%, and chipmaking equipment firms Tokyo Electron and Advantest also experienced declines. SoftBank Group shed 6.4%.

Taiwan's Taiex lost 0.3% ahead of earnings reports from TSMC, a key player in the global chip industry and a bellwether for the AI sector.

Hong Kong's Hang Seng index was a regional exception, rising 1.7% to 25,111.22. Alibaba's shares climbed 4.4% after China's cyberspace regulator approved Apple's AI tools for use in the country, with an Alibaba spokesperson confirming its Qwen model would be integrated.

In China, the Shanghai Composite index dropped 0.9% to 3,921.20. Australia's S&P/ASX 200 edged 0.2% lower to 8,820.50, while India's Sensex climbed 0.3%.

Oil prices eased early Thursday but remained elevated due to intensified U.S. strikes against Iran and Iran's retaliatory actions targeting Kuwait and Bahrain. Brent crude fell 0.4% to $84.55 a barrel, and U.S. benchmark crude was down 0.2% at $79.34 a barrel. Analysts noted that the rising tensions are affecting vessel flows from the Persian Gulf, impacting traffic through the Strait of Hormuz.

On Wednesday, Wall Street saw gains, with the S&P 500 rising 0.4%, the Dow Jones Industrial Average climbing 0.3%, and the Nasdaq composite adding 0.6%. Positive U.S. inflation data for June and strong earnings from companies like BlackRock, whose shares rose 6.6% on better-than-expected results, contributed to the upward movement.

In currency markets, the U.S. dollar slightly weakened against the Japanese yen and the euro.