Asian Stocks Slip as Chip Shares Tumble; Oil Prices Decline

Asian shares mostly declined on Thursday, with heavy selling in computer chip stocks contributing to the downturn, while U.S. stock futures traded little changed following modest losses on Wall Street.

South Korea's benchmark Kospi index sank 5.1% to 7,877.45, with chip-related shares seeing significant declines. Memory chip maker SK Hynix lost 7.7%, and Samsung Electronics tumbled 6.4%. Tokyo's Nikkei 225 lost 1.5% to 69,443.16, with chip equipment maker Tokyo Electron shedding 5.6%. Taiwan's Taiex declined 1.1% as chipmaking giant TSMC, or Taiwan Semiconductor Manufacturing Corp., fell 1.8%.

In contrast, Hong Kong's Hang Seng index rose 0.8% to 23,060.63, boosted by an 8.7% surge in Chinese electric vehicle maker BYD's shares after reporting a second consecutive month of sales increases. The Shanghai Composite index fell 0.9% to 4,075.58, and Australia's S&P/ASX 200 edged 0.1% lower to 8,710.30. India's Sensex climbed 0.5%.

The recent surge in demand for artificial intelligence has propelled many AI and tech stocks higher in recent months, benefiting markets in South Korea, Japan, and Taiwan, which have seen substantial gains this year. The Kospi and Nikkei 225 have risen approximately 85% and 34%, respectively, year-to-date.

However, concerns over a potential glut in supply, stemming from massive investments by major technology companies, have begun to cloud investor sentiment. This sentiment was reflected in U.S. markets on Wednesday, where chip stocks experienced broad declines. Micron Technology gave up 10.6%, Intel sank 9%, Advanced Micro Devices dropped 6.9%, Broadcom lost 2.2%, and Nvidia slipped 1.3%.

The S&P 500, Wall Street's benchmark index, fell 0.2% to 7,483.23. The Dow Jones Industrial Average slipped less than 0.1% to 52,305.24, and the technology-heavy Nasdaq composite dropped 0.7% to 26,040.03. Economists have noted that while AI demand may continue to grow, the pace could be slower than anticipated, and firms and investors might be underestimating the barriers to AI adoption. Transformative technologies, while capable of widespread adoption, may not generate financial returns quickly enough to justify the scale of investment made by many companies.

Oil prices also fell early Thursday, trading below pre-war levels. Negotiators from the U.S. and Iran met separately with mediators from Qatar and Pakistan on Wednesday, influencing market sentiment. Hopes for improved crude supplies have risen, partly due to expectations surrounding the reopening of the Strait of Hormuz, a critical global oil transport route, although vessel traffic remains limited.

Brent crude, the international benchmark, fell 1% to $70.89 per barrel, down from approximately $72 before the conflict began. U.S. benchmark crude also decreased by 1% to $67.91 per barrel.

In currency markets, the U.S. dollar was trading at 162.39 Japanese yen, down from 162.58 yen. The yen had previously fallen to a four-decade low against the dollar on Wednesday. The euro was trading at $1.1387, up from $1.1377.