Hong Kong (AFP) – Seoul tanked again on Friday, leading another rout across Asian equity markets as the rollercoaster ride that has characterised the week rattled into the weekend. The Kospi has seen wild swings over the past five days amid growing concern about a possible bubble in the tech sector that some warn could soon burst.
The sell-off followed heavy losses on Wall Street, where Apple led Magnificent Seven titans lower after announcing price hikes for laptops, tablets, and other products, citing rising costs. The news caused a reverse on the Nasdaq and S&P 500, which had been boosted early on by blowout results from chip company Micron. Amazon and Microsoft added to the downbeat mood after the European Union said they should face tougher digital competition rules because of their dominant position in cloud computing.
The tech sector has been the main driver of a surge to record highs across several markets globally amid an eye-watering boom in all things AI. However, that euphoria appears to be waning of late, with company valuations looking stretched and traders questioning when firms will see a return on the trillions that have been invested. “A few cracks have developed in the tech sector recently,” Miller Tabak’s Matt Maley said. “Therefore, we believe it will be extremely important to watch how these hyperscalers trade going forward because if they continue to decline, it’s going to make it very tough for the rest of the market to advance.”
Seoul’s Kospi dived around nine percent in afternoon trade, before finishing almost six percent off. Chip giants and market heavyweight SK hynix shed more than eight percent, and Samsung lost 5.3 percent. The rout sparked a 20-minute trading halt on the Kospi. The index has seen some wild moves this week amid waxing and waning optimism over the AI boom. The index suffered a 10 percent drop on Tuesday — also sparking a trading halt — before recovering on Wednesday and Thursday.
Tokyo, also heavy with tech firms, shed more than four percent. Tech investment giant SoftBank plunged more than 12 percent as the New York Times reported that ChatGPT-maker OpenAI is considering holding off an initial public offering until 2027. There were also steep losses in Hong Kong, Shanghai, Taipei, Singapore, Jakarta, Manila, and Bangkok. London, Paris, and Frankfurt opened lower.
The losses came even as investors pared expectations for US interest rate hikes after data showed the Federal Reserve’s favoured gauge of inflation came in slightly lower than expected in May. Oil prices resumed the downward shift that has marked the week, having risen around two percent on Thursday on news that a cargo ship was damaged by an unknown projectile off Oman’s coast in the Strait of Hormuz. That prompted the International Maritime Organization to halt an evacuation of crews trapped by the US-Iran war and sparked concerns about the shaky truce put in place as the two foes negotiate.
US media reported that Iran struck the ship in the strait, and the Iranian agency that claims to regulate traffic there issued a warning afterwards. “Any passage through routes outside the framework designated by PGSA will not be covered by safe passage guarantees,” the Persian Gulf Strait Authority said on X. Iran has said it plans to introduce what it terms maritime service fees, which could complicate negotiations with Washington.
– Key figures around 0810 GMT –
Seoul – Kospi: DOWN 5.8 percent at 8,411.21 (close)
Tokyo – Nikkei 225: DOWN 4.2 percent at 69,360.88 (close)
Hong Kong – Hang Seng Index: DOWN 1.8 percent at 22,671.86 (close)
Shanghai – Composite: DOWN 2.3 percent at 4,027.26 (close)
London – FTSE 100: DOWN 0.4 percent at 10,492.00
West Texas Intermediate: DOWN 2.6 percent at $70.08 a barrel
Brent North Sea Crude: DOWN 2.6 percent at $73.33 a barrel
Euro/dollar: UP at $1.1380 from $1.1374 on Thursday
Pound/dollar: UP at $1.3203 from $1.3199
Dollar/yen: DOWN at 161.60 yen from 161.81 yen
Euro/pound: UP at 86.22 pence from 86.18 pence
New York – Dow: UP 0.1 percent at 51,920.62 (close)
© 2024 AFP
