South Korea, Japan shares fall as Asian stocks decline in break from US chip rally

Published Tue, Oct 20, 2026 · 09:58 AM

ASIAN stocks dropped, breaking with a chip-led rally on Wall Street that helped the Nasdaq 100 recover from its worst week since the tariff turmoil of April 2025.

The MSCI Asia Pacific Index fell 0.6 per cent, with eight of its 11 subgroups in the red and three shares declining for every one that gained. 

Losses were led by a more than 2 per cent drop in South Korea’s Kospi Index – a bellwether for artificial intelligence investments – as chip heavyweight SK Hynix headed for its lowest close since April.

Among the main moves in markets, S&P 500 futures were little changed as at 9.35 am Tokyo time. Hang Seng futures were unchanged, Nikkei 225 futures (OSE) fell 0.8 per cent, and Japan’s Topix fell 0.9 per cent.

Data centre infrastructure company Elice plunged as much as 32 per cent in its trading debut in Seoul.

Asia’s decline contrasted with Monday’s tech-led rally on Wall Street, where the Philadelphia Semiconductor Index climbed 1.6 per cent, snapping an eight-day losing streak. As sentiment weakened, Nasdaq 100 futures erased earlier gains and fell 0.1 per cent.

Treasuries held their losses from the previous session, when reduced haven demand pushed yields higher. The yield on the benchmark 10-year US note was at 5.14 per cent, after rising seven basis points on Monday (Oct 19). French bonds also declined following violent unrest over the weekend.

The AI trade faces a fresh test this week as investors await earnings from major technology companies such as Meta Platforms after concerns over heavy spending and higher interest rates rattled the sector.

Earnings from companies including Tesla will offer clues on whether the AI-driven rally has further room to run.

“Results will show whether strong profit growth can restore confidence in the equity rally,” said Mark Haefele at UBS chief investment office. “We continue to expect resilient growth and earnings to support equities, and see attractive opportunities in quality bonds.”

Elsewhere in Asia, China’s central bank signalled its overnight reverse repurchase rate will replace the current seven-day rate as its policy benchmark, another step toward aligning its framework with global peers that may help lower borrowing costs.

In other corners of the market, gold slipped 0.2 per cent to about US$4,130 an ounce. Global crude oil benchmark Brent was little changed at US$109.40 a barrel. 

Oil fluctuated as technical resistance tempered gains driven by renewed supply risks from the Middle East conflict.

The euro is also on traders’ radars as they continue weighing geopolitical risks in France.

Officials rolled out tougher security measures and pledged aid for businesses after cost-of-living protests this weekend degenerated into violence, vandalism and looting.

But a debt mountain and a budget deficit among the largest in the euro area mean the French government cannot simply increase spending to appease the public.

“Euro bulls are scarce these days,” wrote Thomas Hempell, head of macro and market research at Generali Investments. “With the war in Iran dragging on and French politics unresolved, a near-term euro rebound looks unlikely.” BLOOMBERG