Asian Markets Slide Further as AI Stock Sell-Off Weighs on Global Sentiment

BY COMFORT OGBONNA

Asian shares moved lower again on Thursday, extending losses after a sharp sell-off in artificial intelligence-related stocks dragged Wall Street to its weakest session in nearly a month. The cautious mood reflected growing unease among investors ahead of key economic updates, including fresh U.S. inflation data and a closely watched interest rate decision from Japan’s central bank.

Market participants are positioning themselves for volatility as they await Thursday’s U.S. inflation report, which is expected to show consumer prices continuing to rise at an uncomfortably brisk pace. At the same time, attention is focused on Friday’s policy meeting of the Bank of Japan, where officials are widely expected to raise the benchmark interest rate by 0.25 percentage point. The anticipated move is aimed at curbing persistent price pressures, even as Japan’s economy contracted in the July-to-September quarter, underscoring the difficult balance policymakers face between growth and inflation.

In Tokyo, the Nikkei 225 dropped 1.2% to 48,929.95, led by steep losses in technology and semiconductor-related stocks. Chipmaking equipment giant Tokyo Electron slid 3.5%, while Advantest, a major supplier of chip testing equipment, fell 4.1%. Automakers were also under pressure, with Honda Motor Corp. sinking 2.9% after reports said it had suspended production at some plants in Japan and China due to ongoing shortages of computer chips, highlighting how supply chain disruptions continue to ripple through the global manufacturing sector.

South Korean shares followed a similar downward path, with the Kospi index tumbling 1.8% to 3,989.06. Electronics makers and automakers were among the biggest drags on the market. LG Electronics plunged 4.3%, while Samsung Electronics declined 1.6%, as concerns over weakening demand and elevated costs weighed on investor confidence.

Chinese markets delivered a mixed performance. Hong Kong’s Hang Seng index fell 0.4% to 25,357.64 amid broad-based selling, while mainland China’s Shanghai Composite managed a modest gain of 0.2%, closing at 3,876.40. In Australia, the S&P/ASX 200 edged down 0.1% to 8,575.50, reflecting the broader cautious tone across the region.

The weak performance in Asia followed a rough day on Wall Street on Wednesday. The S&P 500 slid 1.2% to 6,721.43, while the Dow Jones Industrial Average fell 0.5% to 47,885.97. The Nasdaq composite, heavily weighted toward technology stocks, dropped 1.8% to 22,693.32. Although slightly more stocks within the S&P 500 rose than fell, gains were overwhelmed by sharp declines among major artificial intelligence players.

The AI sector has come under increasing scrutiny as investors question whether the rapid rise in valuations for Big Tech companies has gone too far. Doubts are also growing over whether massive investments in AI infrastructure will generate enough profits to justify their high costs, especially as some companies take on significant debt to fund expansion. Broadcom sank 4.5%, Oracle lost 5.4%, and CoreWeave plunged 7.1%. Nvidia, whose massive market value gives it outsized influence on major indexes, dropped 3.8%, making it the single biggest drag on the S&P 500.

Utilities and power companies, which had surged earlier in the year on expectations of soaring electricity demand from energy-hungry data centers, also lost momentum. Constellation Energy fell 6.7% as investors reassessed whether earlier optimism had become excessive.

Oil stocks, however, provided a rare bright spot. Shares of energy companies climbed after President Donald Trump ordered a blockade of all “sanctioned oil tankers” entering or leaving Venezuela, a move that injected fresh geopolitical tension into energy markets. Benchmark U.S. crude jumped 1.2% to $55.94 per barrel on Wednesday, rebounding from its lowest level since 2021. Early Thursday, U.S. crude added another 43 cents to $56.24 per barrel, while Brent crude, the global benchmark, rose 40 cents to $60.08 per barrel after gaining 1.3% the previous day.

The rise in oil prices helped lift major energy producers. ConocoPhillips surged 4.6%, Devon Energy rallied 5.3%, and Exxon Mobil advanced 2.4%. Despite the recent rebound, oil prices have trended lower for much of the year on expectations that global supply remains more than sufficient to meet demand.

In corporate news, Netflix edged up 0.2% after Warner Bros. Discovery’s board reiterated its recommendation that shareholders approve a buyout offer from Netflix for its Warner Bros. business, rather than a competing hostile bid from Paramount Skydance for the entire company. Warner Bros. Discovery shares fell 2.4%, while Paramount Skydance dropped 5.4%.

In currency trading early Thursday, the U.S. dollar strengthened slightly against the Japanese yen, rising to 155.75 yen from 155.70. The euro eased to $1.1740 from $1.1743, reflecting the cautious mood ahead of key economic data and central bank decisions that could shape markets in the days ahead.