Asian Markets Slide as AI Stock Selloff Deepens and Oil Prices Rise
Asian shares experienced a notable decline on Friday, with Tokyo’s Nikkei 225 falling by 5 percent, driven by significant sell-offs in computer chipmakers and various AI-related stocks that exerted downward pressure on the markets. South Korean markets were closed on Friday; however, shares in Taiwan experienced a decline of over 5 percent. Stocks associated with artificial intelligence have faced significant pressure in recent weeks, driven by concerns that their valuations have escalated excessively. There are apprehensions regarding the sustainability of the robust demand for computer memory and processors, particularly if AI fails to deliver the anticipated levels of profit and productivity.
Oil prices experienced a significant increase due to the escalation of conflict in the Middle East, whereas US futures showed a decline. The Nikkei declined by 5.8 percent, closing at 62,945.97, whereas the Hang Seng index in Hong Kong decreased by 2 percent to 24,514.29. The Shanghai Composite index declined by 1.6 percent, settling at 3,818.59. In Australia, the S&P/ASX 200 experienced a decline of 0.7 percent, settling at 8,775.70. On Thursday, the S&P 500 experienced a decline of 0.5 percent, despite nearly three out of every four stocks within the index registering gains, following the release of better-than-expected earnings reports from many of the nation’s largest companies for the most recent quarter.
The Dow Jones Industrial Average experienced a decline of 0.2 percent, while the Nasdaq composite saw a more significant drop of 1.5 percent. Nvidia declined by 2.4 percent, positioning it as the most significant drag on the index. Other stocks that have experienced a surge in demand for AI also declined, relinquishing a portion of their impressive gains. Micron Technology experienced a decline of 5.6 percent, reducing its year-to-date gain to 199 percent. SanDisk experienced a decline of 12.6 percent; however, it remains up 494 percent year-to-date. Western Digital declined by 9.2 percent; however, it remains up 171 percent year-to-date.
Oil prices are approaching their peak for the month, driven by concerns that the conflict with Iran may impede oil tankers in the Strait of Hormuz, thereby obstructing crude shipments from the Persian Gulf to global customers. The price for a barrel of Brent crude, the international standard, increased by 1.1 percent to USD 85.13 per barrel. US benchmark crude oil increased by 1.3 percent, reaching USD 79.95 per barrel.
