Shares across Asia experienced a downturn as artificial intelligence (AI) stocks in the U.S. market faced another significant sell-off, leading to a sharp decline. Despite the slide in Asian equities, U.S. futures saw a modest increase, and oil prices also rose by over $1 a barrel.
In key Asian markets, Tokyo’s Nikkei index declined by 0.5% to close at 63,878.60, while South Korea’s Kospi fell by 0.2%, settling at 7,720.75. The Hang Seng index in Hong Kong made a slight recovery, gaining 0.2% to reach 24,468.82, in contrast to the Shanghai Composite, which dipped by 0.2% to 3,983.80. The Australian market saw a similar trend, with the S&P/ASX 200 decreasing by 0.2% to 8,632.50, and Taiwan’s Taiex also fell by 0.4%.
The situation on Wall Street reflected ongoing volatility, with former market leaders facing intense scrutiny. The S&P 500 index fell by 1.6%, marking its first back-to-back decline in three weeks. This brought it down to 7,266.99, reverting to levels not seen since early May. The Dow Jones Industrial Average experienced a significant drop of 953 points, or 1.9%, closing at 49,918.78, while the Nasdaq composite led the decline with a 2% drop to 25,169.50.
Concerns regarding overvaluation have intensified since the AI stock surge, with many investors now questioning whether the recent downturn is a needed correction or the beginning of a more prolonged slump. Super Micro Computer, a vendor of AI servers, saw its stock plummet 28% after announcing plans to raise $7 billion through a stock offering, leading to worries about shareholder dilution.
Micron Technology displayed erratic trading activity, initially losing nearly 4% before fluctuating between gains and losses, ending with a drop of 4.7%. Despite recent volatility, the company’s stock is still up an impressive 212.5% for the year. Nvidia, a dominant player in the AI chip market, weighed heavily on the S&P 500 after falling 3.7%. Broadcom, another key AI company, fell 5.1%, indicating broader concerns about the AI sector.
Investor sentiment was further impacted by rising oil prices, with companies reliant on fuel costs also seeing declines. United Airlines dropped 6.2%, while cruise operator Carnival saw a 6.3% fall in stock value as prices for Brent crude rose by 1.8% to $93.10. This spike in oil prices was linked to ongoing tensions in Iran, raising fears of supply disruptions that could impact the global market.
High fuel costs have been driving inflation upward, with a recent report indicating that U.S. consumer prices surged at their most rapid pace in three years. In light of these price pressures and the vigorous job market, traders are expecting the Federal Reserve to raise interest rates at least once this year. Higher rates can dampen economic activity and adversely affect various investments, including stocks and cryptocurrencies.
As of early Thursday, Brent crude oil rose by $1.34 to $94.44 per barrel, while U.S. benchmark crude increased by $1.50 to $91.53 per barrel. The U.S. dollar weakened slightly against the Japanese yen, dropping to 160.44 from 160.56, while the euro gained ground, rising to $1.1555 from $1.1537.
