Asian stock markets saw a broad decline on Tuesday, with technology and particularly chip stocks leading the rout. South Korea's KOSPI plunged over 10% to 6,023.66, triggering a circuit breaker and heading for its largest monthly fall on record. Major South Korean chipmakers SK Hynix and Samsung saw their shares sink 14.7% and over 13% respectively, having shed nearly 50% of their market value since last month's highs. Japan's Nikkei 225 tumbled 4.0% to 62,364.92, with Kioxia, Advantest, and Tokyo Electron shares also falling significantly. Hong Kong's Hang Seng Index bucked the trend, rising 0.41% to 25,310.85.
The widespread sell-off in Asian technology stocks was attributed to "AI anxiety," as investors grew concerned about the profitability and funding of the AI boom, along with increased competition from Chinese chipmakers. Reports of China manufacturing domestically developed immersion deep ultraviolet (DUV) lithography machines and the strong stock market debut of Chinese chipmaker CXMT intensified these concerns. Analysts like Dorian Carrell from Schroders noted, “there are concerns about the cost and the degree of leverage that needs to be taken on,” questioning the profitability of the semiconductor space, particularly in Asia.
In contrast, US equity markets showed a mixed performance. The Dow Jones Industrial Average rose 1.03% to 52,747.53, and the S&P 500 gained 0.22% to 7,429.22. However, the tech-heavy Nasdaq Composite fell 0.22% to 24,876.91, indicating that even in the US, tumbling chip stocks continued to weigh on the technology sector. Gains in companies like Boeing and Coca-Cola helped offset some of the tech sector's struggles ahead of upcoming quarterly reports from major tech companies like Apple, Microsoft, Amazon.com, and Meta.
Oil prices continued to drop, providing some relief to US markets and easing inflation anxieties ahead of the Federal Reserve's anticipated interest rate decision. Brent crude futures fell 4.8% to $84.09 a barrel, while U.S. crude dropped 4.14% to $79.16 a barrel. This continued decline in oil prices and Treasury yields helped soothe some nerves globally, despite the broader concerns surrounding AI-linked stocks and the semiconductor industry after a stellar rally earlier in the year.
