Asian markets faced a significant decline on Friday, closely following Wall Street’s steep drop, marking one of its most challenging days since April. Concerns over inflated valuations of major tech stocks, particularly within the artificial intelligence sector, contributed to the retreat.
South Korea’s Kospi index experienced the sharpest decline, plummeting 3.2% to close at 4,038.61, primarily influenced by a broad sell-off in tech stocks. Notable losses included Samsung Electronics, which fell 4.1%, and SK Hynix, down 6.4%. LG Energy Solutions also saw a decrease of 3.7%. Taiwan’s Taiex dropped 1.7%, while Japan’s Nikkei 225 reversed earlier gains, falling nearly 1.7% to 50,438.99. The decline was largely driven by SoftBank Group, which saw its stock plunge 5.7% amid ongoing losses from its technology and AI investments.
In the Chinese markets, the Hang Seng index in Hong Kong fell by 1.3% to 26,732.99, with the Shanghai Composite index slipping nearly 0.2% to 4,022.89. China’s industrial output data revealed a troubling growth rate of just 4.9% year-on-year in October, the slowest in 14 months, and substantially below expectations. Additionally, investment in fixed assets plummeted by 1.7% year-on-year during the January to October period, largely due to persistent weaknesses in the property sector affecting business investment.
Australia’s S&P/ASX 200 index decreased by 1.4% to 8,628.30, as expectations for a potential rate cut by the Reserve Bank of Australia waned following a robust jobs report. In India, the BSE Sensex slipped 0.4%.
Meanwhile, Wall Street’s downturn on Thursday was marked by a growing skepticism regarding anticipated interest rate cuts. The S&P 500 index fell 1.7% to 6,737.49, pushing it further from its recent all-time highs. This decline was particularly notable as it represented the poorest performance for the index in a month, reminiscent of prior tumultuous market days. The Dow Jones Industrial Average also dropped 1.7% from its previous record, closing at 47,457.22, while the Nasdaq composite saw a 2.3% decrease to 22,870.36.
Nvidia, a key player in the AI market, was a major contributor to the market’s decline, with its stock falling by 3.6%. Other companies within the AI sector struggled as well, including Super Micro Computer, which saw a drop of 7.4%, and Palantir Technologies, which fell by 6.5%. Such dramatic shifts have sparked comparisons to the dot-com bubble of the early 2000s, raising alarms about the sustainability of these high valuations.
Concerns have been mounting that the Federal Reserve may not enact further interest rate cuts, which traders had been banking on for market stability. Current expectations indicate only a slight possibility of a third rate cut this year, sharply down from nearly 70% just a week ago. Such uncertainty regarding monetary policy may significantly impact stock prices that have been buoyed by optimistic outlooks for rate reductions.
On the commodities front, U.S. benchmark crude oil prices rose by 90 cents to $59.59 per barrel, while Brent crude climbed 87 cents to $63.88 per barrel. The U.S. dollar experienced a slight slip against the Japanese yen, trading at 154.47 from a previous 154.54. The euro, conversely, increased marginally to $1.1641 from $1.1635.
