Stock markets across Asia fell sharply on Friday, with Tokyo’s Nikkei 225 index plunging nearly 5% as investors sold off shares in computer chipmakers and companies tied to artificial intelligence technology.
Japan’s Nikkei finished the day down 5.8%, closing at 62,945.97. Taiwan’s markets also tumbled, losing more than 5% on the day. South Korean markets were not open for trading Friday. Hong Kong’s Hang Seng index dropped 2%, settling at 24,514.29, while China’s Shanghai Composite fell 1.6% to 3,818.59. In Australia, the S&P/ASX 200 slipped 0.7% to 8,775.70.
AI-related stocks have been under pressure for several weeks now. Investors are growing concerned that share prices in the sector have climbed too high, and that the enormous demand for computer memory chips and processors may not hold up if artificial intelligence technology fails to deliver the profits and productivity gains that many have anticipated.
The turbulence carried over from Thursday’s session on Wall Street, where the S&P 500 dropped 0.5% despite the fact that roughly three out of four stocks in the index actually gained ground. That disconnect came as many of the nation’s largest companies reported stronger-than-expected earnings for the most recent quarter. The Dow Jones Industrial Average edged down 0.2%, and the Nasdaq composite fell 1.5%.
Chipmaker Nvidia was the biggest drag on the market, falling 2.4%. Other companies that had surged on AI enthusiasm also gave back some of their recent gains. Micron Technology dropped 5.6%, though it remains up nearly 199% for the year. SanDisk tumbled 12.6% but is still an extraordinary 494% higher than where it started the year. Western Digital fell 9.2%, yet remains up 171% for 2024.
On the energy front, oil prices surged as conflict in the Middle East intensified. Fears that the war with Iran could force oil tankers away from the Strait of Hormuz — a critical shipping lane connecting the Persian Gulf to global markets — pushed prices toward a one-month high. Brent crude, the international benchmark, rose 1.1% to $85.13 per barrel. U.S. benchmark crude climbed 1.3% to $79.95 per barrel. U.S. stock futures also slipped.
