AFP|Published
Asian stocks sank again on Friday as tech firms took another beating from investors increasingly losing faith in the sector, with the traditional safe haven yen and government bonds benefiting from the risk-off mood.
Oil prices added to the dour mood, with Brent heading back towards $115 a barrel for the first time since May on fresh Middle East worries.
It came after Iran threatened to hit US bases in the region if its military continued to escort ships through the Strait of Hormuz.
AI slump
Since AI-linked companies hit record highs in June, their equity prices have been pummelled by concerns they were overvalued, their huge outlays on infrastructure and hardware might not return a profit and, more recently, their servicing costs were spiralling.
That has combined with an Iran war-fuelled surge in oil prices to more than $100 that has ramped up inflation, forced central banks to hike interest rates and sent government borrowing costs to multi-decade highs.
Strong earnings in past quarters have been able to temper many of the concerns, but analysts pointed out that investors are demanding better and better results to justify their backing.
Industrial boost
Earnings from Facebook-parent Meta and chip equipment maker Lam Research this week have beaten forecasts but seen their shares dive.
"Even positive news is being ignored," said FOREX.com's Fawad Razaqzada.
"Strong results are no longer enough if the outlook fails to match an already demanding valuation. Investors are becoming much less forgiving."
The rush out of tech has, however, boosted industrial companies overlooked for much of the AI boom, with the Dow rising this week while the Nasdaq and S&P 500 retreated.
The general losses in New York have filtered through to Asia.
Seoul – which was at the forefront of the AI boom and is now leading losses – shed more than two percent Friday, at the end of a tough week for the Kospi index.
Asian stocks sharply lower
Chipmaker and market heavyweight SK hynix's US shares fell more than eight percent after it said it was scrapping plans for an initial public offering for its US subsidiary Solidigm, citing "market conditions and share price trends".
Tokyo's Nikkei 225, which is also heavily weighted to tech, was sharply lower along with Hong Kong, Shanghai, Sydney, Singapore, Wellington, Jakarta and Manila.
Taipei was closed as Typhoon Champi neared the island.
However, safe-havens benefitted, with the yen rallying against the dollar, helped by strong Japanese inflation data that boosted bets on another interest rate hike.
The currency has struggled against the greenback in recent years owing to the wide interest rate gap between the United States and Japan, as well as worries about the Asian giant's fiscal situation.
US Treasuries were also in demand, with yields falling from two-decade highs.
"Markets are looking for safe havens as the now familiar fears over AI and the tech sector, alongside ever higher oil and energy prices are powering a move back into bonds," said National Australia Bank's Gavin Friend.
"Regardless of the continued climb in oil prices, investors are increasingly looking for safe havens with the recent pullback in US Treasury yields getting a sizeable push," he said, adding that two- and 10-year Treasury yields were at one-month lows.
And Carol Kong at Commonwealth Bank of Australia said the yen could benefit further if the tech trade continued to deteriorate.
Key figures at around 4:30 (SA time)
- Tokyo - Nikkei 225: DOWN 1.7 percent at 61,825.26 (break)
- Hong Kong - Hang Seng Index: DOWN 0.2 percent at 22,883.85
- Shanghai - Composite: DOWN 1.8 percent at 3,590.61
- West Texas Intermediate: UP 0.9 percent at $100.39 per barrel
- Brent North Sea crude: UP 0.9 percent at $114.14 per barrel
- Euro/dollar: DOWN at $1.1212 from $1.1217 on Thursday
- Pound/dollar: DOWN at $1.3395 from $1.3399
- Dollar/yen: UP at 156.89 yen from 156.86 yen
- Euro/pound: DOWN at 83.70 pence from 83.78 pence
- New York - Dow: FLAT at 52,867.98 (close)
- London - FTSE 100: DOWN 0.3 percent at 10,725.03 (close)
AFP