Asian shares follow Wall Street lower as AI worries drag tech stocks lower

Asian shares slipped further on Thursday after declines for AI stocks dragged the US market to its worst day in nearly a month.

Traders are waiting for an update on US inflation, and on a decision Friday by Japan's central bank on interest rates. The Bank of Japan is expected to raise its key rate by 0.25 percentage point to tamp down price pressures, despite a contraction in the July-September quarter.

Tokyo's Nikkei 225 lost 1.2 per cent to 48,929.95, with technology shares leading the decline.

Computer chip maker Tokyo Electron lost 3.5 per cent while chip testing equipment maker Advantest dropped 4.1 per cent.

 

Honda Motor Corp fell 2.9 per cent after reports said it was suspending production at some plants in Japan and China due to shortages of computer chips.

South Korea's Kospi sank 1.8 per cent to 3,989.06, also pulled lower by selling of shares in electronics companies and automakers. LG Electronics declined 4.3 per cent, while Samsung Electronics lost 1.6 per cent.

Chinese markets were mixed as Hong Kong's Hang Seng fell 0.4 per cent to 25,357.64, while the Shanghai Composite index edged 0.2 per cent higher, to 3,876.40.

In Australia, the S&P/ASX 200 edged 0.1 per cent lower to 8,575.50.

Later Thursday, the US government will report on inflation last month. Economists expect that report to show prices for US consumers continue to rise faster than anyone would like.

On Wednesday, the S&P 500 fell 1.2 per cent to 6,721.43 and the Dow Jones Industrial Average dipped 0.5 per cent to 47,885.97. The Nasdaq composite dropped 1.8 per cent to 22,693.32.

Slightly more stocks rose within the S&P 500 than fell, but they got drowned out by the drops for companies in the artificial-intelligence industry.

The sector is being pressured by questions over whether Big Tech companies' share prices have shot too high, whether all the investment in AI will be profitable and productive enough to justify the costs, and by worries over stratospheric levels of debt some companies are taking on to pay for it all.

Broadcom dropped 4.5 per cent, Oracle fell 5.4 per cent and CoreWeave sank 7.1 per cent. Nvidia, the chip company that's become Wall Street's most influential stock because of its tremendous size, fell 3.8 per cent and was the day's heaviest weight on the S&P 500.

Power companies that jumped earlier in the year on expectations for stronger demand from electricity-sucking data centres also lost some of their shine. Constellation Energy fell 6.7 per cent.

On the winning side of Wall Street were oil companies, after President Donald Trump ordered a blockade of all sanctioned oil tankers into Venezuela.

That sent the price of a barrel of benchmark US crude higher by 1.2 per cent to USD 55.94 just a day after it sank to its lowest level since 2021.

Early Thursday, US crude was up 43 cents at USD 56.24 per barrel. Brent crude, the international standard, gained 40 cents to USD 60.08 per barrel. It had climbed 1.3 per cent on Wednesday.

That in turn helped ConocoPhillips rise 4.6 per cent. Devon Energy rallied 5.3 per cent, and Exxon Mobil climbed 2.4 per cent.

Oil prices have been falling for most of this year on expectations that companies are pumping more than enough crude to meet the world's demand.

Netflix added 0.2 per cent after Warner Bros Discovery's board said it still recommends shareholders approve a buyout offer from the streaming giant for its Warner Bros business, rather than a competing hostile bid from Paramount Skydance for the entire company.

Warner Bros Discovery fell 2.4 per cent, while Paramount Skydance dropped 5.4 per cent.

In other dealings early Thursday, the US dollar rose to 155.75 Japanese Yen from 155.70 Yen. The Euro slipped to USD 1.1740 from USD 1.1743.