Asian shares experienced a decline on Thursday, primarily driven by significant sell-offs in computer chip stocks. Concurrently, U.S. futures remained relatively stable following minor losses on Wall Street. This bearish trend has raised concerns among investors regarding the overall health of the tech sector amidst growing fears of a potential supply surplus, particularly after substantial investments from major tech companies.
In South Korea, the benchmark Kospi index plummeted by 5.1%, closing at 7,877.45. Notably, chip-related stocks were heavily impacted, with memory chip maker SK Hynix falling 7.7% and Samsung Electronics tumbling 6.4%. Japan's Nikkei 225 index followed suit, losing 1.5% to 69,443.16, while shares of Tokyo Electron, a manufacturer of chip equipment, dropped by 5.6%. In Taiwan, the Taiex index also faced a downturn of 1.1%, attributed to a 1.8% decline in TSMC, or Taiwan Semiconductor Manufacturing Corporation, one of the largest chipmakers globally.
In contrast, Hong Kong's Hang Seng index recorded a modest gain of 0.8%, reaching 23,060.63. This uptick was largely fueled by Chinese electric vehicle maker BYD, whose shares surged by 8.7% following a report indicating a second consecutive month of sales growth. Meanwhile, the Shanghai Composite index saw a decrease of 0.9%, settling at 4,075.58. In Australia, the S&P/ASX 200 edged down by 0.1% to 8,710.30, whereas India's Sensex experienced a slight increase, climbing by 0.5%.
The recent surge in demand for artificial intelligence technology had previously boosted various AI and tech stocks, especially in South Korea, Japan, and Taiwan, where the Kospi and Nikkei 225 indices have surged approximately 85% and 34%, respectively, since the beginning of the year. However, the market now grapples with apprehensions about a potential excess supply due to the vast investments made by significant firms, including those in the United States.
On the previous day, U.S. chip stocks largely fell, with Micron Technology reporting a staggering drop of 10.6%, Intel declining 9%, Advanced Micro Devices (AMD) retreating by 6.9%, Broadcom losing 2.2%, and Nvidia slipping 1.3%. This bearish performance contributed to the decline of Wall Street's benchmarks. The S&P 500 fell by 0.2% to 7,483.23, the Dow Jones Industrial Average dipped by less than 0.1% to 52,305.24, while the technology-heavy Nasdaq composite index dropped 0.7% to 26,040.03.
Economists from Capital Economics, Megan Fisher and Vicky Redwood, indicated in a note that while demand for AI may persist, its growth could occur at a slower pace than anticipated. They noted that firms and investors might not fully recognize the barriers to AI adoption, which could delay projected financial returns on investments that many firms have made in transformative technologies.
In the oil market, prices fell sharply on Thursday, dipping below levels prior to the onset of the Iran conflict that began in late February. Negotiations involving the U.S., Iran, and intermediaries from Qatar and Pakistan have sparked hopes for improved crude supplies, particularly concerning the Strait of Hormuz, a critical passage for global oil transport. Brent crude futures decreased by 1% to $70.89 per barrel, while benchmark U.S. crude fell 1% to $67.91 per barrel.
Additionally, the currency market saw the U.S. dollar trading at 162.39 Japanese yen, down from 162.58 yen, following the yen's drop to a four-decade low against the dollar on Wednesday. The euro was trading at $1.1387, slightly up from $1.1377.
