Asian markets were sharply lower on Thursday as a renewed sell-off in artificial intelligence and semiconductor stocks swept through the region following hotter-than-expected US inflation, with South Korea and Japan suffering the heaviest losses while Australia staged a dramatic recovery from its morning slump.
ASX recovers from 1% fall after jobs shock
The S&P/ASX 200 finished virtually unchanged at around 8,724 points, down about 0.04%, after falling as low as 8,641.1 earlier in the session as the global technology sell-off initially weighed on Australian equities.
The turnaround accelerated after Australian employment unexpectedly fell by 39,000 in September and the unemployment rate rose to 4.7%, while the participation rate declined to 66.8%, encouraging traders to scale back expectations for another immediate Reserve Bank of Australia interest rate increase.
The Australian dollar weakened to around US$0.6955 following the figures, while Australian government bond yields also fell as investors increased bets that the RBA could leave rates unchanged at its November meeting.
Spot gold was around US$4,151 an ounce, Brent crude traded near US$104.21 a barrel and iron ore was around US$90.45 a tonne during the Australian afternoon.
Kospi plunges as chip stocks buckle
South Korea remained the epicentre of the regional sell-off, with the Kospi down around 8% during afternoon trade as investors continued to dump semiconductor and artificial intelligence-linked stocks.
Samsung Electronics dropped almost 10% and SK Hynix fell around 11%, while the scale of the decline triggered trading curbs as foreign investors continued withdrawing capital from the market.
The latest fall follows several days of severe volatility, with the Kospi already down 5.46% on Tuesday before stabilising briefly on Wednesday.
Nikkei sinks nearly 5%
Japan’s Nikkei 225 was also firmly lower, falling 4.81% to 64,489.06 at the morning close before remaining under heavy pressure into the afternoon session.
Technology stocks led the decline, with SoftBank Group, Tokyo Electron and other companies exposed to the artificial intelligence investment boom suffering steep losses as investors reassessed stretched valuations and the impact of higher global interest rates.
The Nikkei Semiconductor Stock Index was down more than 9% at the morning close, highlighting the concentration of selling in chip-related shares.
Taiwan, China and Hong Kong retreat
Taiwan’s Taiex was down around 3% near 47,100 points during early afternoon trading as semiconductor stocks weakened ahead of quarterly results from Taiwan Semiconductor Manufacturing Company.
Mainland China was also firmly lower, with the Shanghai Composite down around 2% near 3,693 as technology weakness and broader risk aversion weighed on the market.
Hong Kong’s Hang Seng fell around 1%, trading close to 24,100 points during the session as technology and growth stocks joined the regional decline.
India bucks regional weakness
India moved against the regional trend, with the Nifty 50 gaining around 0.8% in morning trading and the Sensex climbing more than 700 points as investors bought banking, technology and consumer stocks.
Lower crude oil prices provided additional support to Indian equities, given the country’s reliance on imported energy.
US inflation reignites rate fears
Thursday’s Asian sell-off followed sharp technology losses on Wall Street after September US inflation rose 3.7% from a year earlier, coming in above expectations and reviving concerns that the Federal Reserve could tighten monetary policy again.
The Nasdaq fell around 2% overnight and the S&P 500 lost 1.1%, while US Treasury yields initially surged as investors reconsidered the outlook for interest rates.
Concerns about the sustainability of artificial intelligence spending and valuations added to the pressure, with the resulting retreat hitting the technology-heavy markets of South Korea, Japan and Taiwan particularly hard.
The regional picture remained firmly risk-off heading into the afternoon, although Australia stood out after weaker domestic employment data helped the ASX erase almost all of an early 1% decline.
