Asian Shares Decline as AI Stock Rally Cools
Traders sold to lock in profits after recent gains in artificial intelligence-related stocks, leading to broad losses across Asian markets.
Asian shares experienced a significant plunge on Friday, with heavy losses in Japan and South Korea as investors took profits following recent rallies in artificial intelligence-related stocks. U.S. futures also declined, and oil prices fell.
Tokyo's Nikkei 225 index shed 4.5%, and the Kospi in Seoul plunged 6.8%. Both indices recovered some of their earlier losses. Hong Kong's Hang Seng lost 1.7%, and the Shanghai Composite index slipped 1.4%. In contrast, Australia's S&P/ASX 200 was an outlier, gaining 0.2%.
Taiwan's Taiex gave up 3.6%. These wide swings are characteristic of recent market volatility, as investors react to substantial investments flowing into AI data centers and related ventures. Shares in Japan and South Korea had reached record highs this week, boosted by strong earnings reports from chipmakers like Qualcomm and Micron Technology.
In South Korea, market movements were heavily influenced by the performance of Samsung Electronics and SK Hynix, both of which are collaborating with Nvidia on AI initiatives. Samsung's shares fell 7% on Friday, while SK Hynix declined by 6.6%. In Tokyo, technology giant SoftBank Group Corp. lost 13.4%, and Advantest sank 10.8%.
On Thursday, the U.S. stock market finished mixed. Several AI stocks fluctuated, while Apple shares dropped 6.1% after price increases on its products. The S&P 500 closed nearly unchanged, the Dow Jones Industrial Average added 0.1%, and the Nasdaq composite fell 0.5%.
Micron Technology's shares jumped 15.7% after reporting better-than-expected profit, revenue, and growth forecasts for the current quarter. This performance helped alleviate concerns that its stock had become overvalued. Micron and other AI stocks have faced intermittent pressure due to worries that their profits might not sustain the pace of their stock price rallies.
While the AI boom has caused significant fluctuations in tech shares, other sectors have remained relatively stable. A report indicated that inflation climbed to 4.1% last month, an increase from 3.8% in April, though economists expect it to ease due to declining oil prices.
The price of Brent crude oil fell 1.8% to $74.13 per barrel, and U.S. benchmark crude oil lost 2% to $70.46. In currency trading, the U.S. dollar weakened against the Japanese yen, falling to 161.64 yen from 161.80 yen. The euro rose to $1.1376 from $1.1371.