Asian stock markets experienced significant downturns on Friday, mirroring a notable decline on Wall Street, which saw one of its worst trading days since the spring. The retreat was largely attributed to ongoing concerns about the inflated valuations of companies closely associated with artificial intelligence, particularly Nvidia.
In South Korea, the Kospi index was at the forefront of the regional sell-off, plummeting by 3.2% to settle at 4,038.61. Major tech players including Samsung Electronics and SK Hynix were impacted heavily, posting declines of 4.1% and 6.4%, respectively. LG Energy Solutions also fell by 3.7%.
Taiwan’s Taiex index reported a loss of 1.7%, while Japan’s Nikkei 225 fared similarly, decreasing nearly 1.7% to close at 50,438.99. The decline was exacerbated by a 5.7% drop in SoftBank Group, which faced losses linked to its technology and AI-related investments.
Chinese markets also felt the heat, with Hong Kong’s Hang Seng index decreasing by 1.3% to 26,732.99 and the Shanghai Composite index easing slightly by 0.2% to 4,022.89. Recent data indicated that October’s factory output in China had grown at a 14-month low of 4.9% year-on-year, falling short of the anticipated 5.5% and down from September’s 6.5%.
In Australia, the S&P/ASX 200 index declined 1.4% to 8,628.30 amid fading expectations of interest rate cuts from the Reserve Bank of Australia that had been buoyed by a robust jobs report. Meanwhile, India’s BSE Sensex registered a minor slip of 0.4%.
The dismal performance on Wall Street was particularly alarming. The S&P 500 fell 1.7% to 6,737.49, marking its most significant drop in a month and deepening the retreat from its all-time high achieved late the previous month. The Dow Jones Industrial Average also dropped 1.7% to 47,457.22, while the Nasdaq composite plummeted 2.3% to 22,870.36. Nvidia, a primary contributor to the AI hype, saw its stock decrease by 3.6%, adding to the bearish sentiment along with other companies in the sector, including Super Micro Computer and Palantir Technologies.
Doubts are rising over the sustainability of the soaring stock prices of AI companies, which have triggered comparisons to the dot-com bubble of 2000. Dispelling hopes that the Federal Reserve might implement further cuts to interest rates in December has left investors wary, contributing to anxiety in the market.
Expectations around interest rate cuts have significantly shifted; traders are now estimating only about a 51.9% chance of a cut, down from nearly 70% just a week prior.
In commodity markets, oil prices saw an uptick. U.S. benchmark crude increased by 90 cents to $59.59 per barrel, while Brent crude rose by 87 cents to $63.88 per barrel. The U.S. dollar weakened slightly against the Japanese yen, trading at 154.47, while the euro appreciated to $1.1641.
