South Korea’s Kospi index tumbled more than 4% on Thursday, leading broad declines across Asian markets, after chipmakers including SK Hynix and Samsung Electronics were caught up in fresh selling of technology stocks tied to the artificial intelligence boom on Wall Street.
Asian shares were mostly lower on Thursday, with South Korea’s Kospi falling more than 4% after declines among major US technology companies overnight. The losses were led by semiconductor firms, with memory chipmaker SK Hynix among the worst hit as investors pulled back from stocks linked to the artificial intelligence sector. Markets across the region also weighed continued uncertainty over the US-Iran conflict and its impact on oil supplies, while attention turned to Friday’s US employment report. Oil prices, meanwhile, held relatively steady.
Chipmakers lead the regional sell-off
The steepest losses came in Seoul, where the Kospi dropped 4.5% to close at 6,306.40. SK Hynix fell 9.7% after declining even before trading opened, while Samsung Electronics, its larger rival, lost 6.1% in what analysts described as the latest bout of selling in shares connected to the AI boom. Both companies are among the world’s largest producers of memory chips, supplying semiconductors used in smartphones, data centres, artificial intelligence systems and consumer electronics more broadly. Because semiconductor firms sit at the centre of the AI supply chain, providing the chips used in cloud computing and AI training, they have become particularly sensitive to shifts in investor sentiment.
Stephen Innes of SPI Asset Management said the pullback appeared to reflect caution ahead of the US jobs data due on Friday. “Asia’s chip selloff looks like a combination of profit-taking and risk reduction ahead of Friday’s nonfarm payroll report,” he said. Technology and semiconductor stocks have been among the strongest-performing sectors globally in recent years, which analysts note can leave them more exposed to profit-taking once sentiment shifts.
Elsewhere in the region, Japan’s Nikkei 225 lost 1.2% to 65,538.44, while Hong Kong’s Hang Seng Index, which tracks many of China’s largest listed companies, declined 1.8% to 25,463.51. The Shanghai Composite, which primarily reflects companies listed on mainland China’s Shanghai Stock Exchange, was little changed at 3,878.92. Australia’s S&P/ASX 200 bucked the regional trend, gaining 0.5%.
All eyes on Friday’s US jobs report
Investors across the region are now looking ahead to Friday’s US nonfarm payrolls report for July, widely regarded as one of the most closely watched economic releases in the world. The data offers insight into employment growth, wage pressures and the broader health of the US economy, and stronger-than-expected figures can shift expectations for Federal Reserve interest rate policy, often triggering volatility across equity, bond and currency markets. The Federal Reserve has been holding its key benchmark rate steady in recent months while it assesses inflation and its effects on the wider economy.
Oil steady but uncertainty over Iran persists
Brent crude, the international benchmark, slipped 0.3% to $79.24 a barrel, while US benchmark crude fell 0.4% to $74.93 a barrel. President Donald Trump said a deal to reopen the Strait of Hormuz was expected soon, though the five-month conflict has already seen numerous stops and starts that have disrupted global oil supply and unsettled energy markets.
The Strait of Hormuz is one of the world’s most strategically significant shipping routes, with roughly one-fifth of global oil consumption passing through the narrow waterway linking the Persian Gulf and the Gulf of Oman. Any disruption to shipping through the strait can affect global energy prices, inflation and transport costs, given how heavily oil and liquefied natural gas exports depend on the route. Oil prices have swung considerably during the conflict, reaching as high as $102 a barrel at one stage, a spike that pushed up petrol prices and shipping costs and added further pressure to already elevated inflation.
Wall Street mixed as earnings season nears its close
On Wall Street on Wednesday, the S&P 500 slipped 0.2% from a record high to close at 7,723.55. The Dow Jones Industrial Average rose 0.5% to 54,349.12, while the Nasdaq Composite fell 0.8% to 26,363.44. Among the biggest technology losers, Alphabet, the parent company of Google, dropped 4%, while Microsoft lost 1.1%.
Despite the tech-driven declines, the broader market has been supported by a strong earnings season. Three-quarters of S&P 500 companies have now reported results, with Wall Street expecting overall profit growth of 50% once all companies have reported.
Among individual movers, the Walt Disney Company rose 3.6% after comfortably beating profit forecasts, boosted by a $1 billion box office haul from Toy Story 5 and strong theme park revenue. Booking Holdings jumped 6.6% after strong travel demand drove growth in both profit and revenue during its latest quarter.
Elon Musk’s SpaceX fell 13.6% following its first quarterly report since going public, released late Tuesday, which revealed a sharp increase in spending on artificial intelligence. The report also benefited chip giant Nvidia, whose shares rose 3.4% after SpaceX announced it would use Nvidia’s chips exclusively for its AI technology, a shift from Musk’s earlier stated plan to use chips from both Nvidia and Advanced Micro Devices across SpaceX and his electric vehicle company, Tesla.
Currency markets
In currency trading early Thursday, the US dollar edged down to 157.73 Japanese yen from 157.77 yen, while the euro slipped to $1.1549 from $1.1555. Currency movements of this kind can carry wider consequences for Asian economies, as a stronger dollar tends to raise import costs and influence the direction of foreign investment flows. Analysts continue to point to a combination of corporate earnings, geopolitical developments, central bank policy and economic data as the key factors likely to drive sharp moves in global equity markets in the period ahead.
