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Investing.com-- Most Asian stocks fell sharply on Friday, hit by a renewed sell-off in technology shares as fears of stretched artificial intelligence valuations remained in play and soured sentiment towards earnings from bellwether Nvidia Corp .
Regional markets took a weak lead-in from Wall Street, which ended sharply lower overnight as investors soured on NVIDIA Corporation (NASDAQ:NVDA) and dumped tech. Broader sectors also declined as strong payrolls data spurred a further pricing out of expectations for a December interest rate cut by the Federal Reserve.
S&P 500 Futures rose 0.4%, with Wall Street seen attempting a recovery.
Asian markets were also grappling with a host of economic readings from Japan and Singapore.
Asia tech plummets as Nvidia cheer sours, AI valuation fears persist
Tech-heavy Asian bourses were the worst performers for the day, led by a near 4% tumble in South Korea’s KOSPI. Heavyweight chipmakers Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), which are also heavily exposed to Nvidia and the AI trade, were the biggest weights on the index.
Japan’s Nikkei 225 index slid 2.2% on losses in tech, while Hong Kong’s Hang Seng shed 2%.
Tech shares slid tracking their Wall Street peers after investors largely soured on Nvidia’s third-quarter earnings. While the chipmaker did beat market expectations, investors raised concerns over the company’s sharp increase in inventory, while comments from management failed to ease doubts over the company’s allegedly circular financing of its largest clients.
This kept fears over stretched tech valuations squarely in play.
TSMC (TW:2330), a major Nvidia supplier, slid 4.1% in Taipei trade, while electronics giant Hon Hai Precision Industry Co Ltd (TW:2317), or Foxconn, lost 4.2%. The latter took little support from signing a supply deal with OpenAI, given that the artificial intelligence startup is also viewed as heavily exposed to a potential AI valuation bubble.
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Japan pressured by rate hike bets after sticky inflation
Japanese shares were also pressured by data showing consumer inflation increased as expected in October, while underlying inflation pushed further above the Bank of Japan’s 2% annual target.
The broader TOPIX index fell 0.1%.
Sticky inflation gives the BOJ more impetus to hike interest rates, with a recent Reuters poll showing that a small majority of investors expect a December hike. This comes even as Prime Minister Sanae Takaichi prepares a massive fiscal stimulus package to support growth.
Concerns over stretched fiscal spending were also a major weight on Japanese markets in recent weeks, especially as investors sold government bonds and pushed yields to multi-decade highs.
Other data offered some positive cues on the Japanese economy. The country logged a smaller-than-expected trade deficit in October on a recovery in exports, while purchasing managers index data showed mild improvement in manufacturing activity.
Broader Asian stocks were mostly negative, as a further decline in bets on a December U.S. interest rate cut weighed on risk-driven markets. Stronger-than-expected nonfarm payrolls data for September drove further conviction that the Fed will hold in December.
Mainland Chinese indexes fell, with the Shanghai Shenzhen CSI 300 and Shanghai Composite sliding 1.8% apiece. Focus remained on a worsening diplomatic spat between China and Japan, over Takaichi’s comments on Taiwan.
Australia’s ASX 200 slid 1.5%, while Singapore’s Straits Times index fell 0.7% even as the island state upgraded its economic growth forecast for 2025, as third-quarter GDP beat expectations.
Futures for India’s Nifty 50 index rose 0.2%, with focus on upcoming PMI data for more cues on the South Asian economy.