Asian Stocks Slide as Investors Exit Chipmakers Ahead of Key U.S. Jobs Report

BY COMFORT OGBONNA

Asian stock markets fell sharply on Thursday as investors took profits in semiconductor shares after a powerful rally during the second quarter, while currency and bond markets turned their focus to an upcoming U.S. employment report that could influence expectations for future Federal Reserve interest-rate decisions.

Technology stocks led the decline across the region, particularly in South Korea and Japan, as traders rotated out of some of the market’s strongest performers. The pullback came after a remarkable quarter driven by enthusiasm surrounding artificial intelligence and the growing demand for advanced memory chips.

MSCI’s broad index of Asia-Pacific shares outside Japan fell 0.8%, while Japan’s Nikkei 225 dropped 1.1%, extending losses from the first trading day of the new quarter. South Korea’s KOSPI suffered the steepest decline among major regional markets, falling 2.7% after already losing about 2% the previous day.

The weakness was concentrated in semiconductor giants that had previously benefited from the AI boom.

SK Hynix plunged 7.7%, while Samsung Electronics tumbled 6.2%. The selling followed reports that Meta Platforms is developing a cloud-computing business that would allow it to sell excess AI computing capacity to external customers. That news helped Meta’s shares surge nearly 9% overnight on Wall Street, while investors reassessed the outlook for some Asian chipmakers.

Hong Kong’s Hang Seng Index stood out as the region’s strongest performer, rising 1.8% and bucking the broader downturn in Asian equities.

Foreign investors have increasingly been reducing exposure to Asian stock markets after the extraordinary AI-driven rally. During the first half of 2026, overseas investors sold Asian equities at the fastest pace seen in at least 16 years, trimming positions in major winners such as South Korea and Taiwan while searching for cheaper opportunities elsewhere in the region.

Attention has now shifted to the U.S. nonfarm payrolls report, scheduled for release on Thursday because financial markets will be closed Friday for the Independence Day holiday. Economists expect the U.S. economy to have added about 110,000 jobs in June, though forecasts range widely from 25,000 to 200,000, suggesting the report has the potential to significantly surprise markets. The unemployment rate is expected to remain unchanged at 4.3%.

Investors are hoping for what many analysts describe as a “Goldilocks” outcome: solid but not excessive job growth, a stable unemployment rate, and signs that the economy is slowing enough to prevent inflation from accelerating again. Such a result could help support equities while reducing fears that the Federal Reserve may need to raise interest rates further.

Currency markets were relatively calm ahead of the data release. The euro steadied around $1.1379 after falling overnight when European Central Bank President Christine Lagarde said inflation and growth risks in the eurozone were becoming more balanced.

The Japanese yen remained under pressure near 162.6 per dollar after briefly touching a fresh 40-year low of 162.84. Japanese officials have continued to warn that they may intervene in currency markets to support the yen, but previous intervention efforts earlier in the year proved only temporarily effective despite massive spending by Tokyo.

Oil prices fell to their lowest levels in roughly four months. Brent crude slipped 0.8% to around $71 per barrel after President Donald Trump said discussions with Iran in Qatar had gone well and as more oil tankers resumed traveling through the Strait of Hormuz, easing concerns about supply disruptions in one of the world’s most important energy routes.

Gold prices rose 0.5% to around $4,050 an ounce as some investors sought safety ahead of the U.S. jobs report and after the precious metal endured a difficult second quarter.

With Asian equities retreating, bond markets cautious, and major currencies holding near critical levels, investors are preparing for a potentially pivotal set of U.S. employment figures that could shape expectations for interest rates, global growth, and market direction during the early months of the new quarter.