Asian Stocks Fall While Oil Rises & Chip Rout Deepens – Asia Market Wrap

Asian stocks fell for a second consecutive day as investors continued rotating out of chipmakers amid growing doubts that massive AI spending will generate sufficient returns. South Korea’s Kospi plunged 9%, extending Tuesday’s 11% decline and putting the index on course for a record two-day loss. SK Hynix slumped as much as 20% after its earnings failed to meet lofty expectations, while Samsung fell as much as 14% ahead of its results.

The sharp decline in South Korea dragged MSCI’s Asia Pacific Index down 1.5% to its lowest level since mid-April. Nasdaq 100 futures fell 0.7%, with the index on track for its sixth consecutive decline, while European markets were also set for a weaker open.

Risk sentiment was further pressured by higher oil prices after renewed fighting in the Middle East. Brent crude climbed almost 4% to trade above $87 a barrel after the US said it intercepted an Iranian attack on its troops before launching retaliatory strikes. Meanwhile, the Dollar weakened.

As investors continued to reduce exposure to technology stocks, consumer discretionary, financial and energy shares have emerged as the strongest-performing sectors in Asia over the past month. A key US semiconductor index fell another 4.5% on Tuesday, leaving the Nasdaq 100 on the verge of entering a technical correction.

Attention now turns to a busy week for central banks. The Fed is widely expected to leave interest rates unchanged, although markets continue to price a small chance of a surprise rate hike. Investors will also be watching policy decisions from the BoE on Thursday and the BoJ on Friday.