Asian financial markets experienced significant downward pressure on Thursday, extending a global trend of declines triggered by a substantial sell-off in artificial intelligence stocks across U.S. markets. The technology sector’s weakness produced the worst trading day for American markets in nearly four weeks, creating ripple effects across Asian exchanges.
Japan’s Nikkei 225 index dropped 1.2% to settle at 48,929.95, with technology companies leading the downward movement. Semiconductor equipment manufacturer Tokyo Electron witnessed a 3.5% decline, while Advantest, specializing in chip testing equipment, saw a more pronounced 4.1% decrease. The automotive sector also faced challenges, as Honda Motor Corporation’s shares fell 2.9% following reports of production suspensions at multiple facilities in Japan and China due to ongoing semiconductor shortages.
South Korea’s Kospi index experienced a more substantial contraction, declining 1.8% to 3,989.06. The sell-off particularly affected electronics manufacturers and automobile companies, with LG Electronics dropping 4.3% and Samsung Electronics decreasing 1.6%.
Chinese markets presented a mixed performance landscape. Hong Kong’s Hang Seng index retreated 0.4% to 25,357.64, while mainland China’s Shanghai Composite index demonstrated resilience with a modest 0.2% gain, closing at 3,876.40. Australia’s S&P/ASX 200 registered a minimal 0.1% decline, finishing at 8,575.50.
Market participants worldwide are closely monitoring two critical developments: the impending U.S. inflation data release and the Bank of Japan’s interest rate decision scheduled for Friday. Economists anticipate that Japan’s central bank will implement a 0.25 percentage point rate increase to address persistent price pressures, despite economic contraction during the July-September quarter.
The technology sector’s decline stems from growing investor concerns regarding excessive valuations among major tech corporations. Questions are emerging about whether substantial investments in artificial intelligence will generate sufficient profitability and productivity to justify current expenditure levels. Additional worries center on the alarming debt levels some companies are accumulating to finance their AI initiatives.
Wednesday’s trading session in the United States saw the S&P 500 decline 1.2% to 6,721.43, while the Dow Jones Industrial Average decreased 0.5% to 47,885.97. The technology-heavy Nasdaq Composite experienced the most significant drop, falling 1.8% to 22,693.32. Notable decliners included Broadcom (4.5% decrease), Oracle (5.4% drop), and CoreWeave (7.1% plunge). Nvidia, whose market influence has grown substantially due to its massive valuation, declined 3.8%, exerting considerable downward pressure on the S&P 500.
Energy companies emerged as notable exceptions to the broader market weakness, benefiting from President Donald Trump’s executive order blocking sanctioned oil tankers from entering Venezuela. This geopolitical development pushed benchmark U.S. crude prices upward by 1.2% to $55.94 per barrel, following a recent decline to multi-year lows. Early Thursday trading showed U.S. crude advancing by 43 cents to $56.24 per barrel, while Brent crude, the international standard, gained 40 cents to reach $60.08 per barrel.
The energy sector’s strength translated to share price gains for several major oil producers. ConocoPhillips increased 4.6%, Devon Energy rallied 5.3%, and Exxon Mobil climbed 2.4%. These gains occurred against a backdrop of generally declining oil prices throughout most of the year, driven by expectations of adequate global supply meeting demand.
In corporate developments, Netflix shares edged 0.2% higher after Warner Bros. Discovery’s board recommended shareholders accept the streaming company’s acquisition offer for its Warner Bros. business unit, rather than a competing hostile bid from Paramount Skydance for the entire corporation. Warner Bros. Discovery shares declined 2.4%, while Paramount Skydance dropped 5.4%.
Currency markets showed minimal movement in early Thursday trading, with the U.S. dollar strengthening slightly to 155.75 Japanese yen from 155.70 yen. The euro experienced a marginal decrease against the dollar, trading at $1.1740 compared to $1.1743.