Asian stock markets faced significant declines on Friday. Tokyo’s Nikkei 225 plunged by 4%, heavily influenced by the sale of shares in computer chipmakers and AI-focused companies. In Taiwan, shares experienced a sharp drop of 6.5%, following an announcement by TSMC, the largest contract computer chip manufacturer globally, regarding its plans to invest an additional $100 billion in new U.S. fabrication plants. TSMC’s stock fell by 7.3% on Friday.
Concerns have lingered regarding the valuation of AI-related stocks, fueled by fears that the demand for computer memory and processors may not be sustainable. This stems from doubts about AI’s potential to deliver on promised profitability and productivity gains.
Meanwhile, oil prices surged as tensions escalated in the Middle East. The United States intensified its airstrike campaign against Iran, targeting crucial infrastructure like bridges and towers at an Iranian port. This move forms part of President Donald Trump’s strategy to pressure Iran and influence control over the Strait of Hormuz.
The Nikkei index dropped to 64,141.12, nearing its lowest point in over a month. Tokyo Electron, a key player in chip equipment manufacturing, plummeted 8.2%, while Advantest saw a 7.2% drop. SoftBank Group also declined by 9%. Hong Kong’s Hang Seng index decreased by 2%, and Shanghai’s Composite index faltered by 3.1%. In Australia, the S&P/ASX 200 trailed off by 0.5%.
Stephen Innes of SPI Asset Management commented that investors are cashing in profits from successful first-half investments and shifting focus to previously neglected areas.
U.S. markets mirrored this trend with notable declines. Despite favorable earnings reports from major companies, the S&P 500 fell by 0.5%, while the Dow Jones Industrial Average slipped 0.2% and the Nasdaq composite decreased by 1.5%. Nvidia’s stock was particularly affected, shedding 2.4% and becoming the most significant drag on the index. Micron Technology fell 5.6%, reducing its annual gain to below 199%. SanDisk and Western Digital also saw substantial declines yet remained up for the year by 494% and 171%, respectively.
Oil prices rose close to their monthly peak amid concerns over the war with Iran possibly obstructing oil shipments through the Strait of Hormuz. Brent crude increased by 1.1%, reaching $85.13 per barrel, with U.S. benchmark crude rising by 1.3% to $79.95 per barrel.
Conflicting reports on the U.S. economy emerged on Thursday. Retail sales underperformed economist expectations, while lower unemployment benefit applications indicated a robust job market. Additionally, manufacturing activities in the mid-Atlantic region surpassed forecasts.
In currency exchanges early Friday, the U.S. dollar fell to 162.19 Japanese yen, while the euro appreciated, reaching $1.1452.