Asian markets declined on Thursday as artificial intelligence-related stocks plummeted following a sell-off on Wall Street, driven by anxieties regarding intensifying competition and profit growth within the semiconductor sector.
South Korea’s Kospi index tumbled more than 7 per cent, while Japan’s Nikkei 225 fell 5.12 per cent by midday local time. Meanwhile, Hong Kong’s Hang Seng index retreated 1 per cent and the Shanghai Composite Index shed 1.75 per cent.
Asian markets are grappling with “not just the deeper sell-off in AI-related stocks but also the tightening of financial conditions that comes from higher yields and a higher US dollar”, said Kyle Rodda, senior financial market analyst at Capital.com.
In a report released Thursday, the International Monetary Fund also cautioned that the Asia region is heavily dependent on the current AI boom.
Robust global demand for AI infrastructure, semiconductors, and associated technology has bolstered investment and exports, particularly for economies deeply embedded in tech supply chains.
“The AI-driven technology boom has provided an important offset for economies in East and South-East Asia, although the evolution of AI investment and its long-term economic effects are uncertain,” the fund stated in its outlook for the Asia-Pacific region.
“A correction in AI-related investment or asset valuations could weigh disproportionately on Asia given its central role in global technology supply chains,” it added.
The IMF further noted that uncertainty surrounding US monetary policy could sustain volatility across Asian financial markets.
Overnight, US stocks retreated after consumer price <a Wall Street tumbled on further evidence that <a Mr Rodda said.
He added that the <a critical driver of markets in US trade".
US inflation climbed to 3.7 per cent on an annual basis in September, surpassing both the 3.6 per cent projection and the 3.4 per cent recorded in August. Core inflation also exceeded expectations, reaching 2.6 per cent year-on-year.
“US stocks sold off as higher-rate expectations returned to the fore, with the S&P 500 recording its weakest session since late July and the Nasdaq hit harder by pressure on chip names,” said Daniel Richards, senior economist at Emirates NBD.
“The risk-off move extended into Asia, where falls in Japan and Korea this morning were much sharper.”
The US inflation figures now suggest an increased probability of a rate hike by the US Federal Reserve, Mr Rodda noted.
