Asian equities moved lower on Friday as profit-taking in technology-heavy names and semiconductor firms accelerated, prompting a shift toward more cyclically sensitive stocks. The pullback was most pronounced in Japan and South Korea, where chip and artificial intelligence-related shares extended recent weaknesses.
Futures indicated further softness into the Asian session. Nasdaq 100 futures were down nearly 1% in Asian trade while S&P 500 futures slipped about 0.5%, signaling a risk-off tone at the open. Market participants were also eyeing the U.S. nonfarm payrolls report for May, due later in the day, for fresh clues on the strength of the global economy.
South Korea: KOSPI hit hard as chipmakers tumble
South Korea's KOSPI was the weakest market in the region, plunging intraday by as much as 6% as local chipmakers saw sharp declines. Notably, Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) each fell by over 8% at one point, before trimming some of those losses.
Sentiment in South Korea was further shaken by comments from Labor Minister Kim Young-Hoon, who told Reuters that the nation’s largest technology companies should distribute a greater share of artificial intelligence-related profits to suppliers, subcontractors, and workers. The minister had previously helped broker a last-minute pay deal between Samsung and a major union, a negotiation that averted a strike and resulted in substantial payouts for the company’s memory chip workers.
Japan: Tech and chip names pull Nikkei lower amid BOJ rate chatter
Japan’s Nikkei 225 underperformed regional peers, falling about 1.6% as technology and semiconductor stocks cooled after a recent rally driven by AI optimism. Chip and AI-related constituents such as SUMCO Corp. (TYO:3436), Ibiden Co Ltd (TYO:4062), and Renesas Electronics Corp (TYO:6723) were among the index’s weakest performers.
By contrast, the broader TOPIX index was essentially flat for the session, supported by gains in industrial and consumer sectors. However, market participants noted growing speculation that the Bank of Japan will raise interest rates later this month - a debate stoked after Governor Kazuo Ueda indicated earlier in the week that the central bank would discuss a rate increase. Stronger-than-expected wage income figures for April released on Friday were cited as providing the BOJ with more latitude to consider higher rates, given the bank’s focus on wages and inflation as its key rate-setting criteria.
Other regional moves and policy watch
Broader Asian markets were mostly softer on the day. Hong Kong’s Hang Seng index dropped roughly 0.8%, weighed by losses in technology names. Mainland China’s Shanghai Shenzhen CSI 300 and the Shanghai Composite largely traded in narrow ranges. Australia’s S&P/ASX 200 slipped about 0.6%, and Singapore’s Straits Times index was lower by roughly 0.1%.
In India, futures for the Nifty 50 pointed to a flat open ahead of a Reserve Bank of India policy decision expected later in the day. The central bank is widely anticipated to hold rates steady, though commentary could skew dovish amid mounting economic headwinds associated with increased tensions in the Middle East.
Geopolitical uncertainty and market implications
Heightened uncertainty tied to the U.S.-Iran conflict remained a factor, with little progress reported toward a comprehensive peace settlement and renewed hostilities in the Middle East during the week. That background added to the caution among investors already trimming technology gains and repositioning into sectors sensitive to economic cycles.
With U.S. payrolls data imminent, markets were in a watchful stance. The combination of earnings-driven profit-taking in technology and chips, central bank rate-speak in Japan, and geopolitical tensions left trading zones biased toward risk reduction rather than fresh speculative positions.
Bottom line
Profit-taking in AI and semiconductor names drove sizable losses across key Asian exchanges, most notably in South Korea and Japan. Rate speculation around the BOJ, upcoming U.S. employment data, and geopolitical risks added to the market’s cautious tone as investors rotated into more economically sensitive sectors.