Asian equity markets experienced a broad decline on Thursday, with South Korea’s Kospi index leading the downturn with a significant 6.4% plunge. This regional slump occurred even as global oil prices registered a modest slip, defying expectations of a sharper rise despite ongoing back-and-forth strikes between the United States and Iran, which have kept geopolitical tensions elevated. The market movements reflect a complex interplay of regional monetary policy, a notable sell-off in AI-related technology shares, and persistent geopolitical uncertainties.
Asian Benchmarks Under Pressure
Across Asia, benchmarks largely trended downwards. Tokyo’s Nikkei 225 index registered a 2.8% fall, closing at 66,835.54. The selling pressure was particularly acute in the technology sector, with shares of AI-related companies facing considerable headwinds. This trend was evident in Japan, where memory chipmaker Kioxia skidded 15%, chipmaking equipment company Tokyo Electron dropped 4.5%, and chip testing equipment maker Advantest gave up 5.9%. SoftBank Group, a major technology investor, also shed 6.3% of its value.
U.S. futures edged lower in early trading, signaling potential caution ahead. In Europe, Britain’s FTSE 100 fell 0.4% to 10,475.27, France’s CAC 40 also declined 0.4% to 8,348.82, and Germany’s DAX shed 0.3% to 24,926.60.
South Korea’s Steep Decline Driven by Rate Hike and Tech Sell-Off
South Korea’s Kospi index bore the brunt of the regional sell-off, sinking 6.4% to 6,820.60. This substantial tumble was exacerbated by an interest rate hike from the Bank of Korea (BOK), its first such move since 2023. The BOK’s decision was reportedly aimed at helping curb inflationary pressures stemming from the ongoing conflict in Iran. The impact on the nation’s dominant technology firms was immediate and severe, with memory chipmaker SK Hynix dropping 11.5% and electronics giant Samsung Electronics falling 8.8%.
Taiwan’s Chip Sector Shows Resilience Amid Global Volatility
In contrast to the broader regional declines, Taiwan’s Taiex index ended nearly unchanged, demonstrating a degree of resilience. This stability was notably bolstered by positive developments in the semiconductor industry. Taiwan computer chipmaker TSMC gained 1.2% ahead of its highly anticipated earnings report. Following market close, TSMC, widely regarded as a barometer for the global industry and the burgeoning artificial intelligence boom, announced an additional $100 billion in investments for its U.S. computer chipmaking capacity. The company also reported record earnings in the last quarter and issued higher revenue growth forecasts, signaling robust demand.
The positive sentiment surrounding TSMC extended to European markets, with Dutch chip machine maker ASML’s shares rising 0.9% in early Thursday trading, reacting to TSMC’s stronger-than-expected results.
Mixed Performance Across Other Asian Markets
While most of Asia faced declines, Hong Kong’s Hang Seng index emerged as a regional outlier, posting a gain of 1.3% to close at 25,008.60. This upward movement was significantly driven by technology giant Alibaba, whose Hong Kong-traded shares climbed 3.1%. The surge followed an announcement from China’s cyberspace regulator on Wednesday, approving the Apple Intelligence AI tool for use in China. An Alibaba spokesperson confirmed that its Qwen model would be integrated into Apple Intelligence, indicating a strategic collaboration.
Elsewhere in China, the Shanghai Composite index dropped 1.9% to 3,882.41. Australia’s S&P/ASX 200 closed flat at 8,840.70, while India’s Sensex managed a modest gain of 0.2%.
Oil Prices Slip Despite Intensified Mideast Tensions
The global oil market saw prices meander and slip, despite the escalating military actions in the Middle East. Brent crude, the international benchmark, dropped 0.3% to $84.68 a barrel. This price point remains elevated compared to the approximately $72 per barrel observed in late February before the conflict in Iran began. Benchmark U.S. crude also slipped, albeit by less than 0.1%, settling at $79.57 per barrel. The U.S. has intensified its strikes against Iran, while Iran has reportedly targeted missile and drone fire on Kuwait and Bahrain, contributing to the volatile yet surprisingly subdued oil price movements.
Wall Street Rises on Inflation Data and Strong Earnings
Conversely, Wall Street concluded Wednesday’s trading session on a positive note. The benchmark S&P 500 rose 0.4%, the Dow climbed 0.3%, and the technology-heavy Nasdaq composite added 0.6%. This upward momentum in the U.S. was attributed to a report indicating a slowdown in inflation during June, alongside strong earnings results from major firms such as American investment company BlackRock. BlackRock’s shares notably rose 6.6% after it reported stronger-than-expected quarterly revenue and profit.
Currency Markets See Minor Shifts
In currency markets early Thursday, the U.S. dollar experienced a slight depreciation against the Japanese yen, falling to 162.14 yen from 162.19 yen. Meanwhile, the euro strengthened against the dollar, rising to $1.1467 from $1.1464.
The day’s trading underscored a fragmented global market landscape, where regional economic policies, sector-specific dynamics, and geopolitical events converged to create divergent outcomes. While a significant sell-off in AI-related shares and a rate hike pressured South Korean and Japanese markets, robust earnings and strategic investments in the chip sector offered a counterpoint in Taiwan. Simultaneously, oil prices remained sensitive to Middle East tensions, even as U.S. markets found support in easing inflation and strong corporate results, painting a complex picture for investors navigating ongoing uncertainties.
