Asia

Asian stocks take another hit from AI, Middle East worries

Read a summary of this article on FAST.

Get bite-sized news via a new
cards interface. Give it a try.

Click here to return to FAST
Tap here to return to FAST

HONG KONG: Asian equities went into reverse on Friday (Jun 5) on continued worries about the artificial intelligence trade after disappointing forecasts from chip titan Broadcom, while investors were also keeping a wary eye on stuttering Middle East peace efforts.

After leading several markets to record highs this year, technology firms are facing selling pressure on concerns that the eye-watering sums pumped into AI may have been overdone and stock valuations are too high.

Broadcom on Wednesday sparked concern among traders who have piled into all things AI when its revenue forecast for the third quarter came in below expectations, sparking a sell-off in Wall Street’s Nasdaq as dealers took profits and rotated into other sectors.

And the losses have bled through to Asia, where tech-heavy Seoul and Tokyo – which have led the region’s surge this year – sank from record highs.

Show More

Show Less

South Korean stocks tanked almost 7 per cent at one point on Friday, having dropped 1.8 per cent the day before. The Nikkei in Tokyo was off more than 1 per cent, matching Thursday’s retreat.

The losses come as investors contemplate a coming IPO by Elon Musk’s SpaceX, which is aiming to raise US$75 billion in the biggest initial public offering ever.

The company said in a regulatory filing that it would offer more than 550 million shares at US$135 each next week, which could value the company at US$1.8 trillion.

There were also losses in Hong Kong, Sydney, Singapore and Taipei, though Shanghai, Wellington and Manila edged up.

Jakarta extended losses amid building fears about the state of the Indonesian economy and the rupiah, which have been hammered by surging oil prices.

“Broadcom’s revenue miss sparked profit-taking across the semiconductor sector and gave investors a reason to pause after the recent AI-driven rally,” said City Index’s Fiona Cincotta.

“Broadcom’s results suggest investor expectations may have run ahead of fundamentals.”

The latest AI wobble came as investors grew nervous about grinding efforts to end the Middle East crisis.

The head of militant group Hezbollah on Thursday rejected a conditional truce announced by Lebanon and Israel, demanding a comprehensive ceasefire and full Israeli withdrawal from its northern neighbour.

Naim Qassem’s message came after the two sides agreed to a conditional ceasefire that Lebanon’s president called the “last chance” for a durable end to the fighting.

Talks between Iran and the United States also appeared to be going nowhere, with Iran reporting “no tangible progress”, even as President Donald Trump again voiced optimism, telling reporters a deal “could happen … over the weekend”.

Still, oil prices held their recent losses amid lingering optimism a deal will be struck and the Strait of Hormuz – through which a fifth of global oil usually passes – will reopen.

Official US jobs data due later in the day are also in focus following forecast-topping private data that indicated the economy remained healthy and fanned bets on the Federal Reserve hiking interest rates.

Source: AFP/dc

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Get bite-sized news via a new
cards interface. Give it a try.

Click here to return to FAST
Tap here to return to FAST

About The Author

admin

See author's posts