Market overview
Asian equity markets slid on Thursday as renewed weakness in semiconductor names triggered a wave of profit-taking after the prior session's AI-fuelled rebound. South Korean and Japanese bourses underperformed the region, reflecting sharp losses at major chipmakers and hardware suppliers.
Overnight in the United States, the Nasdaq snapped a multi-day winning streak as some AI-related companies disappointed investors following earnings. Advanced Micro Devices declined despite beating quarterly estimates because its outlook did not meet investor expectations. SpaceX also fell after its first public-company earnings report highlighted elevated capital spending tied to AI initiatives.
Price action and sector drivers
The broader MSCI AC Asia Pacific ex-Japan index fell about 0.7%, reversing part of Wednesday's roughly 1.5% rally. Nasdaq 100 futures were little changed in Asia while S&P 500 futures were up about 0.2% as sentiment improved modestly from the U.S. session.
Semiconductor stocks led the regional selloff. In South Korea, the KOSPI tumbled more than 4% to become the weakest performer among Asian benchmarks. Major names saw steep declines: SK Hynix plunged, Samsung Electronics lost ground and LG Innotek fell, following sharp overnight drops for U.S. memory-chip makers Sandisk and Western Digital after their earnings reports.
In Japan, the Nikkei 225 fell about 1.2% while the broader TOPIX lost roughly 0.4%. Kioxia Holdings slumped, Murata Manufacturing and TDK dropped materially, even as Sony bucked the trend and gained nearly 2%.
Hong Kong insurers hit
Hong Kong's Hang Seng fell nearly 2%, with insurers among the weakest subgroups after reports that Chinese authorities have begun enforcing taxes on investment income from offshore insurance policies. AIA Group tumbled more than 8%, Prudential declined nearly 6% and FWD Group shed about 6%. Major banks also weakened: HSBC and Standard Chartered both moved lower.
Other regional dynamics
Chinese mainland markets were comparatively resilient. The Shanghai Shenzhen CSI 300 dropped about 0.5% and the Shanghai Composite eased approximately 0.1%. Australia's S&P/ASX 200 slipped after having reached a record high above 9,200 in the previous session; profit-taking among miners accompanied stronger-than-expected June trade data.
In India, the Reserve Bank of India left its benchmark repo rate unchanged at 5.25% as expected; the Nifty 50 was largely unchanged at the open. Singapore's FTSE Straits Times Index edged down about 0.2%, following the softer regional tone despite continued resilience in bank stocks.
Commodities and rates
Oil traded in a narrow band as markets weighed reports that Washington and Tehran may be moving toward an interim agreement over the Strait of Hormuz. Brent crude hovered near $79 a barrel, a level that helped keep inflation expectations and Treasury yields contained. Fed funds futures implied roughly a 54% chance of a September rate hike after weaker-than-expected ADP employment data, down from about 58% the prior day.
Looking ahead
Investors are awaiting SoftBank Group's earnings later on Thursday, while Friday's U.S. nonfarm payrolls report is expected to be the next major test for interest-rate expectations and sentiment toward technology stocks.
Key points
- Semiconductor-sector profit-taking drove heavy losses in South Korea and Japan, reversing part of a recent AI-led rebound.
- Hong Kong insurers plunged after reports of Chinese enforcement of taxes on investment income from offshore insurance policies.
- China's mainland markets, Australia and Singapore were relatively resilient, while oil traded in a tight range, limiting broader inflation and rate volatility.
Risks and uncertainties
- Ongoing volatility in semiconductor stocks could continue to pressure technology and hardware sectors across Asia, particularly in Korea and Japan.
- Further enforcement or clarification of taxes on offshore insurance investment income in China could weigh on Hong Kong-listed insurers and regional financials.
- Upcoming U.S. payroll data and corporate earnings from major technology groups could shift interest-rate expectations and market sentiment toward cyclical and growth sectors.