Hong Kong (AFP) – Tech firms led more steep losses across Asian markets Friday as investors struggled to shake off fears about an AI bubble. This followed a sell-off on Wall Street triggered by jobs data that dealt a further blow to hopes for a US interest rate cut. A blockbuster earnings report from chip bellwether Nvidia on Wednesday initially settled nerves regarding the vast investments in the artificial intelligence sector, which some feared may have been overdone.
However, the euphoria was short-lived as warnings grew that the tech-led rally across equities — which has seen several markets hit records and companies clock eye-watering capitalizations — may have run its course, prompting speculation that a correction could be imminent. In unveiling Nvidia’s forecast-topping report, CEO Jensen Huang dismissed concerns of a bubble that has caused global equities to wobble. “From our vantage point, we see something very different,” he affirmed.
After Nvidia sparked an Asia rally on Thursday, Wall Street began on a strong note but later reversed sharply. Selling was compounded by worries over the US labor market, as data showed that while more jobs were created in September, the unemployment rate ticked higher. This reading did little to change investors’ belief that the Federal Reserve will maintain its borrowing costs during its next meeting, with officials preoccupied by stubbornly high inflation. Expectations had already been dampened by recent hawkish comments from decision-makers, including Fed Chairman Jerome Powell.
Tracking New York, Asian markets were a sea of red, with tech giants leading the way. Seoul-listed Samsung Electronics sank nearly five percent and rival SK Hynix more than nine percent; both are among the world’s leading memory chip makers. Another chip titan, TSMC, tanked nearly four percent in Taiwan, while Japan’s SoftBank plunged more than ten percent in Tokyo, which led broader markets lower.
Tokyo, Hong Kong, Seoul, Sydney, and Taipei all recorded declines between 1.6 percent and 3.2 percent, with additional losses observed in Shanghai, Singapore, and Wellington. The rush away from risk assets also saw Bitcoin fall below the $93,000 mark for the first time since April, extending a sell-off that began after its record high above $126,200 touched just last month.
“The price action across markets has been prolific, and we’ve seen some truly impressive reversals in risk assets,” noted Chris Weston at Pepperstone. “Sentiment in so many markets remains highly challenged, and we’ve seen new evidence that managers are dumping their 2025 winners — raising expectations that the path of least resistance is for risk to trade lower in the near term.” The market appears increasingly sensitive and ready to de-risk based on emerging news, almost seeking reasons to reduce positioning when that news may otherwise be seen as positive in a more bullish context.
Eyes are also on Tokyo, where there are discussions that Japanese Prime Minister Sanae Takaichi will unveil a massive stimulus package worth around $130 billion to boost the struggling economy. However, government bond yields have surged in recent days due to warnings that the spending will likely require even more borrowing, raising concerns about the country’s fiscal state and exerting significant pressure on the yen. The Japanese currency has slipped this week to its lowest level against the dollar since January, though it received slight support from data showing core inflation picked up last month, providing the Bank of Japan with some room to potentially hike interest rates.
– Key figures at around 0200 GMT –
Tokyo – Nikkei 225: DOWN 1.8 percent at 48,947.66
Hong Kong – Hang Seng Index: DOWN 1.7 percent at 25,393.93
Shanghai – Composite: DOWN 1.0 percent at 3,892.76
Dollar/yen: DOWN at 157.38 yen from 157.55 yen on Thursday
Euro/dollar: UP at $1.1535 from $1.1525
Pound/dollar: UP at $1.3083 from $1.3070
Euro/pound: DOWN at 88.15 from 88.18 pence
West Texas Intermediate: DOWN 1.1 percent at $58.36 per barrel
Brent North Sea Crude: DOWN 1.0 percent at $62.73 per barrel
New York – Dow: DOWN 0.8 percent at 45,752.26 (close)
London – FTSE 100: UP 0.2 percent at 9,527.65 (close)
© 2024 AFP
