Asian Shares Decline Amid Concerns Over AI Stocks and Oil Price Surge
Asian stock markets declined significantly on Friday. The Tokyo Stock Exchange’s Nikkei 225 fell by 4%. The decrease followed substantial selling in stocks related to artificial intelligence (AI) and chip manufacturing. South Korean markets remained closed, yet Taiwan experienced a 6.5% drop in shares. This came a day after Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, declared plans to allocate an additional $100 billion for U.S. plant construction. TSMC’s stock value fell 7.3% on Friday.
AI-related stocks have been facing pressure over the last few weeks. Concerns have emerged that their current valuation is too high. There’s also skepticism about whether AI will deliver the anticipated gains in profit and productivity. In Tokyo, computer chip equipment maker Tokyo Electron’s shares plummeted by 8.2%. Chip testing equipment manufacturer Advantest’s stock dropped 7.2%, and SoftBank Group saw a 9% decline.
In other regions, Hong Kong’s Hang Seng index decreased by 2%, reaching 24,501.89. The Shanghai Composite Index fell by 3.1% to 3,764.15. Australia’s S&P/ASX 200 showed a smaller decline of 0.5%, decreasing to 8,796.70. According to Stephen Innes of SPI Asset Management, investors are transitioning from early-year high performers to overlooked sectors.
U.S. markets also experienced declines on Thursday. The S&P 500 saw a 0.5% decrease, despite positive earnings reports from major companies. The Dow Jones Industrial Average had a minor decline of 0.2%, while the Nasdaq composite decreased by 1.5%. Nvidia’s stock fell by 2.4%, significantly impacting the index. AI-related stocks such as Micron Technology, SanDisk, and Western Digital experienced decreases, though they have enjoyed substantial gains for the year so far.
Oil prices are climbing, nearing their highest levels in a month. The conflict in the Middle East has fueled fears that shipping routes like the Strait of Hormuz might be blocked. This situation threatens global oil supplies from the Persian Gulf. Brent crude reached a price of $85.13 per barrel, increasing by 1.1%. Meanwhile, U.S. benchmark crude rose by 1.3% to $79.95 per barrel.
In the U.S., economic reports on Thursday provided mixed insights. Consumer spending at U.S. retailers fell short of expectations, while fewer workers filed for unemployment benefits, signaling a strong job market. Manufacturing in the mid-Atlantic region exceeded economists’ forecasts.
The U.S. dollar experienced a decline, falling to 162.19 Japanese yen from 162.38 yen. The euro saw a slight increase, moving to $1.1452 from $1.1443.