Tech Giants Drive Asian Market Slide Amid AI Bubble Fears

Asian markets experienced significant declines on Friday, with technology companies at the forefront, as investors found it difficult to ove...

Asian markets experienced significant declines on Friday, with technology companies at the forefront, as investors found it difficult to overcome concerns regarding an AI bubble. This was further exacerbated by a sell-off on Wall Street driven by job data, which dampened expectations of a US interest rate reduction.

A major financial update from chip leader Nvidia on Wednesday appeared to ease concerns that significant investments in the artificial intelligence industry might have been excessive.

However, the excitement was brief, as concerns increase that the technology-driven surge in stock markets—where many indices have reached new highs and companies have achieved staggering valuations—might be coming to an end, with a potential downturn on the horizon.

When revealing Nvidia's outstanding report, CEO Jensen Huang downplayed concerns about a bubble that has led to fluctuations in global stocks.

"From our perspective, we observe something entirely different," he stated.

Following his company's role in triggering an Asia surge on Thursday, Wall Street started with a solid performance, but later experienced a significant downturn, as selling pressure increased due to concerns about the US job market.

Data indicated that although more jobs were added in September, the unemployment rate increased slightly.

The assessment had minimal impact on investors' conviction that the Federal Reserve will maintain current borrowing rates during its upcoming meeting, as officials concentrate more on persistently elevated inflation.

The anticipation had already been lowered by recent statements from officials, including boss Jerome Powell, which took a more aggressive stance.

Monitoring New York, Asian markets showed widespread declines, with technology companies at the forefront.

Samsung Electronics, listed in Seoul, fell by almost five percent, while SK hynix dropped over nine percent — both companies are among the top memory chip manufacturers globally.

A major semiconductor company, TSMC, dropped almost four percent in Taiwan, while Japan's SoftBank fell over 10 percent in Tokyo.

This caused wider markets to decline.

Tokyo, Hong Kong, Seoul, Sydney, and Taipei all experienced declines ranging from 1.6 percent to 3.2 percent. Additionally, Shanghai, Singapore, and Wellington also saw losses.

The surge in risk assets also caused bitcoin to drop below $93,000 for the first time since April, continuing a decline that has been ongoing since it reached a peak above $126,200 just last month.

"The market movements have been abundant, and we have witnessed some remarkable turnarounds in risk-related assets," stated Chris Weston from Pepperstone.

Sentiment across numerous markets is still very difficult, and we have observed fresh evidence indicating that managers are selling their 2025 top performers — increasing the likelihood that the most probable direction for risk assets is to decline in the short term.

The market appears significantly more reactive and inclined to reduce risk in response to new developments, almost looking for justifications to lower positions when this information could easily be interpreted as favorable in a more optimistic scenario.

Attention is also focused on Tokyo, where discussions are ongoing that Japanese Prime Minister Sanae Takaichi is set to announce a significant economic stimulus plan valued at approximately $130 billion to revitalize the struggling economy.

However, government bond yields have risen sharply in recent days due to warnings that the spending may require even greater borrowing, increasing worries about the nation's financial condition and placing significant pressure on the yen.

The Japanese yen has dropped this week to its weakest point against the dollar since January, although it received some assistance from figures indicating that core inflation slightly increased last month, providing the Bank of Japan with more flexibility to raise interest rates.

Major figures around 0200 GMT

Tokyo - Nikkei 225: Decreased by 1.8% to 48,947.66

Hong Kong - Hang Seng Index: Decreased by 1.7% to 25,393.93

Shanghai - Composite: Decreased by 1.0 percent to 3,892.76

Dollar/Japanese Yen: Decreased to 157.38 yen from 157.55 yen on Thursday

Euro/dollar: Increased to $1.1535 from $1.1525

Pound/dollar: Increased to $1.3083 from $1.3070

Euro/pound: Decreased to 88.15 from 88.18 pence

West Texas Intermediate: Decreased by 1.1 percent to $58.36 per barrel

Brent North Sea Oil: Decreased by 1.0 percent to $62.73 per barrel

New York - Dow: Decreased by 0.8% to 45,752.26 (closing value)

London - FTSE 100: Increased by 0.2% to 9,527.65 (closing value)