Asian Markets Retreat After Wall Street Tech Sell-Off as AI Fears Rattle Investors

BY COMFORT OGBONNA

Asian stock markets traded mostly lower on Friday, mirroring steep losses on Wall Street as a broad sell-off in technology shares intensified concerns that artificial intelligence could disrupt established business models. U.S. futures were largely steady in early trading, suggesting investors were pausing after the previous session’s sharp declines.

In Japan, the benchmark Nikkei 225 slipped 0.8% to 57,165.13. The pullback came a day after the index briefly surpassed the 58,000 level for the first time, highlighting how quickly sentiment has shifted. Shares of SoftBank Group tumbled 6.8%, despite the company reporting a quarterly profit supported by gains from investments including its stake in OpenAI. Investors appeared more focused on broader AI-related volatility than on the firm’s earnings momentum.

South Korea’s Kospi bucked the regional trend, rising 0.4% to 5,545.49 after crossing the 5,500 milestone a day earlier. Gains were driven by strength in technology heavyweights, with Samsung Electronics climbing 1.2%. The advance suggested selective investor confidence in certain chipmakers and hardware producers even as software and AI-exposed names faced pressure.

Elsewhere in the region, Hong Kong’s Hang Seng Index dropped 1.8% to 26,547.97, while China’s Shanghai Composite Index fell 0.7% to 4,105.04. In Australia, the S&P/ASX 200 declined 1.4% to 8,919.30, reflecting broad-based weakness in technology and growth-oriented shares.

The downturn followed a difficult session in the United States, where concerns about AI-driven disruption weighed heavily on major indices. The S&P 500 dropped 1.6% to 6,832.76, marking its second-worst day since Thanksgiving, though it remains close to record highs set last month. The Dow Jones Industrial Average fell 1.3% to 49,451.98, and the Nasdaq Composite slid 2% to 22,597.15, with technology shares leading the retreat.

Among individual stocks, Cisco Systems plunged 12.3% despite posting better-than-expected quarterly results, as investors questioned the sustainability of its profitability in an evolving AI landscape. Similarly, AppLovin sank 19.7% even after delivering earnings that topped forecasts, as fears grew that AI tools could undermine parts of its business model.

The recent turbulence highlights growing unease about whether the massive investments companies are making in AI infrastructure and software will generate adequate returns. While AI has fueled a powerful market rally over the past year, especially in technology stocks, analysts caution that uncertainty about long-term monetization and competitive pressures could continue to generate volatility.

Not all market observers are pessimistic. Economists at Capital Economics maintain a constructive outlook, arguing that a sustained reversal in tech leadership would likely require a much deeper downturn in the sector itself. They continue to project a favorable year for U.S. equities overall, supported by technology-driven growth.

Outside the tech sector, some U.S. companies showed resilience. McDonald’s gained 2.7% after reporting stronger-than-expected profits, while Walmart rose 3.8%, reflecting steady consumer demand.

Investors are also closely monitoring upcoming U.S. inflation data, which could influence the next moves by the Federal Reserve. Many economists believe the likelihood of another interest rate cut in the coming months remains low, but any surprise in inflation figures could shift expectations.

In commodities trading early Friday, U.S. benchmark crude edged down 0.1% to $62.77 per barrel, while Brent crude slipped marginally to $67.49. Precious metals advanced, with gold rising nearly 1% to $4,995.80 per ounce and silver climbing 1.4% to $76.72.

Currency markets were relatively calm. The U.S. dollar strengthened slightly to 152.89 Japanese yen from 152.72 yen, while the euro eased to $1.1867 from $1.1871.