Asian stocks tumble as AI rally pauses, US-Iran peace talks stall

An AI-driven rally that boosted stocks earlier in the week fizzled out as chipmaker Broadcom reported underwhelming results

Shares have fallen in Asia, with South Korea's benchmark dropping more than 5 per cent, after sharp declines for some big artificial intelligence-related stocks in the US.

 

US futures also retreated.

 

On Wall Street on Thursday, computer chipmaker Broadcom's shares sank 12.6 per cent when it gave a forecast that fell short of investors' expectations, raising concerns over the wider AI and technology sector.

 

US memory chip maker Micron Technology dropped 7.7 per cent, and cybersecurity company CrowdStrike Holdings fell 3.8 per cent.

 

Still, the benchmark S&P 500 climbed 0.4 per cent and the Dow Jones Industrial Average gained 1.7 per cent to a record. The tech-heavy Nasdaq composite edged 0.1 per cent lower.

 

 

But in Asia, investors dumped key AI-related shares, with South Korea's SK Hynix plunging 8.4 per cent and Samsung Electronics shedding 5.4 per cent.

 

The Kospi dropped 5.1 per cent by midday to 8,185.62. The index has roughly doubled in the past year lifted by gains for such big tech companies.

 

Japan's Nikkei 225 slipped 1.4 per cent to 66,532.35, with technology shares leading the decline, even as official data showed that Japan's real wages rose for the fourth straight month. Chip equipment maker Tokyo Electron's shares fell 7.2 per cent.

 

Hong Kong's Hang Seng declined 0.8 per cent to 25,047.83, while the Shanghai Composite index gained 0.4 per cent to 4,075.31.

 

Australia's S&P/ASX 200 fell 0.5 per cent to 8,639.50.

 

Taiwan's Taiex gave up 1.5 per cent, while India's Sensex was up 0.2 per cent.

 

Oil prices stabilised after falling on Thursday. Brent crude, the international standard, was up 0.4 per cent to $95.42 per barrel. It fell to around $95.03 a barrel on Thursday, and was approximately $70 per barrel before the start of the war in late February.

 

Benchmark US crude was 0.1 per cent higher at $93.15 a barrel.

 

Strong corporate earnings and excitement about AI demand have helped pushing some stock markets to new heights, despite repeated jolts from the Iran war.

 

Oil prices are still under pressure as the Strait of Hormuz, a narrow waterway crucial for global oil and natural gas transport, remains effectively closed, and the war-caused energy shock is threatening to slow economic growth and fuel inflation in many countries.

 

American and Iranian negotiators reached a tentative deal last week to extend their ceasefire, but the agreement has not been finalised, as meanwhile developments in Lebanon have cast doubts on prospects for a permanent end to the conflict.

 

On Thursday, the Iran-backed Lebanese militant group Hezbollah rejected the latest ceasefire agreement between the Lebanese and Israel governments.

 

"While there are few signs of progress in US-Iran talks, the oil market continues to trade on expectations of an imminent deal that would resume flows through the Strait of Hormuz," ING commodities strategists Warren Patterson and Ewa Manthey wrote in a report.

 

Hopes regarding the US-Iran negotiations may have been "overly optimistic," they said.

 

In other dealings early Friday, the US dollar fell to 159.97 Japanese yen from 160.03 yen. The euro was trading at $1.1614, up from $1.1610.