Asian stock markets retreated on Thursday as a pullback in technology and chipmaking shares coincided with lingering doubts about progress in U.S.-Iran negotiations, leaving investors reluctant to chase risk assets.
Traders in the region absorbed a negative lead from U.S. markets, where indexes slipped from record highs overnight amid renewed uncertainty over talks with Iran and related geopolitical developments. S&P 500 futures were down 0.4% in after-hours trading, pressured in part by steep losses in chip names after Broadcom reported mixed quarterly results and guidance.
That weakness in Broadcom filtered into Asian markets, hitting chip-heavy bourses particularly hard. South Korea's KOSPI was among the region's worst performers as chipmakers retraced earlier gains.
Japan
Japan's Nikkei 225 fell 1.9% while the wider TOPIX index declined 1.4% on Thursday. Local equities were hit by comments from Bank of Japan Governor Kazuo Ueda, who said the central bank needs to weigh the pros and cons of raising interest rates given rising inflationary risks.
Speaking at a seminar, Ueda cautioned that inflation could overshoot targets because of an energy shock tied to the Iran conflict. He did not explicitly announce rate increases, but his remarks suggested a growing likelihood of the BOJ discussing tightening when it meets later in the month.
Technology and semiconductor losses compounded pressure on the market after a recent run-up in those sectors had pushed the Nikkei to record highs earlier in the week. SoftBank Group Corp. (TYO:9984) was the single largest detractor on the Nikkei, sliding nearly 11% and amplifying the index's decline.
Korea and the chip sector
South Korea's KOSPI also underperformed, slipping as much as 2% as heavy selling hit chipmakers. Major names including Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) declined in the range of about 2% to 4% after having reached a string of record highs in recent sessions as traders took profits.
Markets were further dented by Broadcom's after-hours slide of around 12% in the U.S., after the chip designer reported disappointing quarterly revenue and maintained its AI sales outlook for the current quarter. Mixed earnings and guidance from the company weighed on sentiment across the semiconductor complex.
Broader Asian landscape
Across the region, broader markets retreated amid persistent concern over the U.S.-Iran conflict, especially following a recent escalation in hostilities. The status of indirect negotiations remained unclear after Iranian media reported that Tehran had halted indirect communications with Washington.
Australia's S&P/ASX 200 dropped 1.4% and Singapore's Straits Times Index fell 1.2%. In mainland China, the CSI 300 and Shanghai Composite eased between 0.2% and 0.4%. Those losses were partly contained by an extended rally in local chipmaking names, fueled by optimism about domestic AI progress and expectations of an upcoming index reshuffle that could benefit some local semiconductor stocks.
Hong Kong's Hang Seng index fell 1.2%, similarly pressured by declines in technology shares. Futures for India's Nifty 50 were flat after the Nifty itself slid to a near two-month low.
The regional pullback reflects a mix of profit-taking in high-flying technology names and renewed geopolitical caution amid unclear progress in U.S.-Iran diplomacy. Market participants monitored central bank rhetoric, corporate earnings and guidance in the chip sector, and developments in the Middle East as drivers of near-term market direction.