Asian Markets Dip as AI Concerns Weigh on Tech Stocks
Asian shares experienced additional declines on Thursday, following a drop in AI stocks that led the US market to its poorest performance in almost a month. Traders are anticipating an update on US inflation, as well as a decision from Japan’s central bank regarding interest rates this Friday. The Bank of Japan is anticipated to increase its key rate by 0.25 percentage points in an effort to mitigate price pressures, even in light of a contraction during the July-September quarter. Tokyo’s Nikkei 225 experienced a decline of 1.2 per cent, closing at 48,929.95, as technology shares took the lead in the downturn. Computer chip maker Tokyo Electron experienced a decline of 3.5 per cent, while chip testing equipment maker Advantest saw a decrease of 4.1 per cent. Honda Motor Corp experienced a decline of 2.9 per cent following reports indicating that it would be suspending production at certain plants in Japan and China due to shortages of computer chips. South Korea’s Kospi fell by 1.8 per cent to 3,989.06, driven down by the selling of shares in electronics companies and automakers. LG Electronics experienced a decline of 4.3 per cent, whereas Samsung Electronics saw a loss of 1.6 per cent.
Chinese markets displayed a mixed performance, with Hong Kong’s Hang Seng declining by 0.4 per cent to 25,357.64, whereas the Shanghai Composite index saw a slight increase of 0.2 per cent, reaching 3,876.40. In Australia, the S&P/ASX 200 dipped 0.1 per cent to 8,575.50. Later Thursday, the US government is set to release its report on inflation from the previous month. Economists anticipate that the forthcoming report will indicate that prices for US consumers are continuing to increase at an undesirable pace. On Wednesday, the S&P 500 declined by 1.2 percent, closing at 6,721.43, while the Dow Jones Industrial Average experienced a decrease of 0.5 percent, finishing at 47,885.97. The Nasdaq composite fell by 1.8 percent, closing at 22,693.32. A modest number of stocks within the S&P 500 experienced gains, surpassing those that declined; however, these advances were overshadowed by significant losses among firms in the artificial intelligence sector.
The sector faces scrutiny regarding whether the share prices of Big Tech companies have escalated excessively, whether the substantial investments in AI will yield sufficient profitability and productivity to warrant the expenses, and concerns about the astronomical levels of debt that some companies are incurring to finance these ventures. Broadcom experienced a decline of 4.5 per cent, Oracle saw a decrease of 5.4 per cent, and CoreWeave plummeted by 7.1 per cent. Nvidia, the chip company that has emerged as market’s most influential stock due to its immense size, experienced a decline of 3.8 percent, making it the day’s largest drag on the S&P 500. Power companies that surged earlier in the year due to expectations for increased demand from electricity-intensive data centres have also diminished in appeal. Constellation Energy experienced a decline of 6.7 percent.
Oil companies emerged victorious on market following President Donald Trump’s directive to impose a blockade on all sanctioned oil tankers entering Venezuela. The price of a barrel of benchmark US crude rose by 1.2 percent to USD 55.94, following a significant drop to its lowest level since 2021 just a day prior. On early Thursday, US crude experienced an increase of 43 cents, reaching USD 56.24 per barrel. Brent crude, the international benchmark, increased by 40 cents to reach USD 60.08 per barrel. It had risen by 1.3 percent on Wednesday. As a result, ConocoPhillips experienced a 4.6 per cent increase. Devon Energy surged by 5.3 per cent, while Exxon Mobil experienced an increase of 2.4 per cent. Oil prices have been declining throughout much of this year, driven by expectations that companies are producing sufficient crude to satisfy global demand. Netflix experienced a 0.2 percent increase following the announcement from Warner Bros Discovery’s board, which expressed its continued recommendation for shareholders to accept a buyout offer from the streaming giant for its Warner Bros business, in preference to a rival hostile bid from Paramount Skydance for the entire company. Warner Bros Discovery experienced a decline of 2.4 per cent, whereas Paramount Skydance saw a decrease of 5.4 per cent. In other dealings early Thursday, the US dollar increased to 155.75 Japanese Yen from 155.70 Yen. The Euro declined to USD 1.1740, down from USD 1.1743.
