Asian equity markets broadly declined, with a significant sell-off in technology stocks, especially semiconductor manufacturers, impacting major indices. South Korea's KOSPI index suffered the steepest losses, falling as much as 6% and triggering circuit breakers, with Samsung Electronics and SK Hynix shares each dropping over 7%. Japan's Nikkei 225 also saw a decline of around 1.4%, influenced by the global tech rout, while broader MSCI Asia-Pacific shares excluding Japan were down 1.2%.
The downturn was largely attributed to a rotation out of AI-linked names, stemming from Wall Street's reaction to Meta Platforms' signal of capital expenditure discipline, including plans to potentially sell off excess AI computing power. This raised concerns about overbuilt AI capacity and triggered a violent sell-off in US tech that extended into Asian trading hours. Adding to the semiconductor sector's woes, reports surfaced that Apple is in discussions to source memory chips from blacklisted Chinese suppliers CXMT and YMTC, which introduces a pricing threat to established Korean and Japanese chipmakers.
Oil prices continued their slide, reaching new four-month lows, with Brent crude down 1% to $70.88 a barrel. This followed positive progress reported in indirect US-Iran talks in Doha. Gold, conversely, pushed back above $4,000/oz, supported by softer jobs data and falling oil prices. Investor attention was critically focused on the upcoming US non-farm payrolls data, expected to show an addition of 110,000 jobs in June, as it will provide key cues for Federal Reserve interest rate policy, with markets pricing in approximately an 80% chance of a September rate hike.
