Asian markets experienced a significant downturn on Friday. The Nikkei 225 in Tokyo fell by 4%, driven by substantial selling of computer chipmakers and other AI-related stocks. In Taiwan, shares decreased by 6.5% following TSMC’s announcement of a $100 billion investment in the U.S. for new fabrication plants. This led to a 7.3% drop in TSMC shares.
The AI sector has been under pressure due to concerns over the sustainability of high stock prices and whether AI can deliver the promised profits and productivity. Stocks like Micron Technology and SanDisk saw declines, yet remain significantly up for the year.
Oil prices have surged amid escalating conflict in the Middle East. This rise is linked to the intensified U.S. airstrike campaign against Iran, targeting infrastructure to pressure Iran regarding the Strait of Hormuz blockade.
Other markets affected include Hong Kong’s Hang Seng, which fell by 2%, and China’s Shanghai Composite, which dropped by 3.1%. Australia’s S&P/ASX 200 decreased by 0.5%. Investors are shifting focus from earlier winners to lagging sectors.
Despite recent earnings surpassing expectations, U.S. indices also took a hit. The S&P 500 declined by 0.5%, the Dow Jones Industrial Average by 0.2%, and the Nasdaq by 1.5%. Nvidia, a significant player in the AI sector, fell by 2.4%.
Oil prices nearing monthly highs raise concerns about restricted tanker routes through the Strait of Hormuz, affecting global oil shipments. Brent crude rose to $85.13 per barrel, while U.S. crude reached $79.95 per barrel.
Mixed reports on the U.S. economy highlighted lower retail spending but indicated a stable job market with fewer unemployment claims. Manufacturing in the mid-Atlantic region is stronger than anticipated.
Currency fluctuations were noted, with the U.S. dollar falling to 162.19 yen and the euro climbing to $1.1452.