Investing.com-- Asian stocks retreated on Thursday, pressured chiefly by losses in the technology sector following underwhelming guidance from market darling Nvidia, although expectations of lower interest rates helped limit overall losses.
Declines in the tech sector were also relatively muted, given that NVIDIA Corporation (NASDAQ:NVDA) still beat expectations with its quarterly earnings. Analysts were seen maintaining a bullish stance on the firm.
Regional markets took a weak lead-in from Wall Street, with U.S. stock index futures falling in Asian trade as concerns over Nvidia rattled the technology sector. The Dow Jones Industrial Average and the S&P 500 were also nursing a fall from record highs.
Asian tech, chipmakers fall tracking Nvidia
Tech-heavy Asian bourses were the worst performers for the day, with South Korea’s KOSPI, Hong Kong’s Hang Seng and the Taiwan Weighted index losing around 0.8% each.
Losses in tech also pulled Japan’s Nikkei 225 down 0.2%, while the TOPIX lost 0.3%.
Tech losses were weighted largely towards chipmakers, especially those with direct exposure to Nvidia- which fell as much as 8.5% in aftermarket trade.
Taiwan’s TSMC (TW:2330) (NYSE:TSM) fell 2%, while Hon Hai Precision Industry Co Ltd (TW:2317), also known as Foxconn, lost 1.6%.
Memory chip maker and key Nvidia supplier SK Hynix Inc (KS:000660) slid 6%, while bigger rival Samsung (KS:005930) lost 3%.
In Japan, chip testing equipment maker Advantest lost 0.5%, while Tokyo Electron shed 1.1%.
Semiconductor Manufacturing International Corp (HK:0981)- the biggest chipmaker in China and a local rival for Nvidia, fell slightly.
Broader technology stocks also fell, as Nvidia’s earnings spurred some concerns that the so-called “AI trade” that had underpinned the sector over the past year was now losing more steam.
Losses in tech also came amid a broader pivot out of the sector and into more economically sensitive stocks, as investors looked to lower interest rates in the coming months.
Broader Asia losses relatively muted, rate cuts in focus
Barring tech, losses in broader Asian markets were limited by buying into sectors poised to benefit from lower interest rates.
Australia’s ASX 200 fell 0.4%, benefiting from its lower tech weightage. The index had also shrugged off a stronger-than-expected reading on consumer inflation, released on Wednesday.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.1% and 0.5%, respectively, languishing at over six-month lows amid little signs of improving sentiment towards the country.
Futures for India’s Nifty 50 index pointed to a mildly positive open, after the index appeared to have made more headway above the closely-watched 25,000 level. The Nifty and the BSE Sensex 30 were in spitting distance of new peaks.
Recent dovish comments from the Federal Reserve cemented expectations for a September rate cut, which bodes well for stock markets. Focus this week is on U.S. gross domestic product data and PCE price index data- the Fed’s preferred inflation gauge- for more economic cues.