Asia stocks retreat as tech rally cools; KOSPI hits record high in catch-up trade

Investing.com-- Most Asian stocks fell on Friday, pressured by some profit-taking in the technology sector, while South Korean markets soared to record highs as trade resumed after a week-long break.

Regional markets tracked overnight declines in Wall Street, which fell from record highs as a long-running tech rally paused for breath. Markets were also left wanting more cues on the U.S. economy, as an ongoing government shutdown delayed the release of several data points.

S&P 500 Futures rose 0.2% in Asian trade, as persistent bets on an October interest rate cut by the Federal Reserve still underpinned risk appetite. A ceasefire between Israel and Hamas also kept sentiment upbeat. 

Japan stocks spooked by strong inflation 

Japan’s Nikkei 225 fell 1%, while the broader TOPIX index slid 1.7%, with both indexes falling from recent record highs. Losses in tech stocks pressured the Nikkei, with tech conglomerate SoftBank Group Corp. (TYO:9984) falling 3.4% from record highs. 

Local markets were spooked by a stronger-than-expected producer price index inflation reading for September, given that sticky inflation is likely to elicit more rate hikes by the Bank of Japan. 

But the BOJ is expected to face growing resistance from the Japanese government over its rate hike plans, especially with fiscal dove Sanae Takaichi set to become prime minister.

Japanese markets rallied this week on Takaichi’s election as the leader of the ruling Liberal Democratic Party, with a parliamentary session on her prime ministership set to convene in mid-October. 

China shares dip, Hong Kong pressured by tech losses 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.5% and 0.2%, respectively, pulling back from a sharp bounce in the prior session. Mainland markets resumed trade on strong footing after the golden week holiday, with government data pointing to steady consumer spending during the break. 

Hong Kong stocks lagged, with the Hang Seng index falling as much as 1%. Tech shares were the biggest weight on the index, as they fell tracking their U.S. peers. 

Semiconductor Manufacturing International Corp (HK:0981), China’s biggest chipmaker, sank 5.2% and was the worst performer on the Hang Seng. 

Losses in high-flying biotech stocks also weighed, after U.S. lawmakers pushed forward a defense bill that will bar certain Chinese biotech firms from receiving federal funding, and will also restrict American investments in sensitive Chinese industries. 

WuXi AppTec Co Ltd (HK:2359) and WuXi Biologics (HK:2269), which are targeted by the measure, fell between 2% and 3% in Hong Kong trade. 

Broader Asian markets mostly trended lower, with Singapore’s Straits Times index down 0.2%, while Australia’s ASX 200 moved in a flat-to-low range. 

Futures for India’s Nifty 50 index rose 0.2%, with a string of key tech earnings due in the coming weeks. 

South Korea reopens with a bang, hits record high in chips rally 

South Korean markets were an outlier, with the KOSPI rallying about 1.5% to a record high of 3,617.86 points. 

Local markets rose largely in catch-up trade after a week-long holiday, with tech shares– especially chipmakers– leading the advance. 

The KOSPI surged to a record high last week after heavyweight chipmakers SK Hynix Inc (KS:000660) and Samsung Electronics Co Ltd (KS:005930) signed deals to supply memory processors to OpenAI, which represent a major revenue source for the coming years. 

Samsung and SK Hynix surged 5.1% and 6.6%, respectively, on Friday. SK Hynix hit a record high, while Samsung was at a near six-year peak.