Asian shares retreat as tech stocks plunge on AI slowdown fears

Asian stocks retreated on Friday after a Wall Street rout wiped out roughly $2.5 billion in market value and sent the Nasdaq into correction territory on Thursday.

Shares of companies exposed to artificial intelligence (AI) data centres, including crucial chipmakers and semiconductor manufacturers, came under significant selling pressure amid concerns over valuations and whether substantial AI spending can generate sufficient returns.

Rate hike worries also weighed on markets after two Federal Reserve officials supported modest and steady interest-rate increases.

The US dollar held firm against major currencies, while gold traded lower near $4,050 an ounce as traders awaited the US October payrolls report later on Friday for more clues on a possible rate hike in December.

Brent crude futures were little changed near $99 a barrel but were on track for a weekly loss of about 11% on hopes of de-escalation in the US-Iran conflict and a possible reopening of the Strait of Hormuz.

China’s Shanghai Composite index closed 1.1% lower at 3,649.18 on worries about the durability of the AI boom. Hong Kong’s Hang Seng index fell 1.27% to 24,481.86.

Japanese markets plummeted, dragged down by technology and AI-linked stocks on concerns over tighter regulations in the United States.

The Nikkei average fell 5.96% to 57,434.77, falling below the 60,000-mark for the first time since May and entering bear market territory after a more than 20% fall from its June peak.

The broader Topix index settled 5.9% lower at 3,707.99. Japanese chip-testing equipment maker Advantest, Japanese chip equipment maker Tokyo Electron, Japanese memory chipmaker Kioxia Holdings and Japanese technology investor SoftBank Group slumped 5-11% on apprehensions over the pace of future AI infrastructure development and capital spending.

Japanese electronics maker Panasonic and Japanese conglomerate Hitachi both fell around 5% on growing uncertainty over the economic and political outlook.

Seoul stocks nosedived to hit a nine-month low, reflecting a significant sell-off in technology and semiconductor shares.

South Korean technology company Samsung Electronics, South Korean chipmaker SK Hynix and South Korean holding company SK Square slumped 6-10% on fresh uncertainty over policies on AI and data centres following a sweeping victory for the Democratic Party in the US midterm elections.

The Kospi index plunged 6.02% to 5,059.69. A circuit breaker was activated by the Korea Exchange to halt trading temporarily after the index fell more than 8% in early trading.

After an emergency meeting of senior officials, Finance Minister Lee Hyoung Il said the country’s economic fundamentals are solid and authorities are ready to unveil more steps to ease the bourse turmoil.

Australian markets closed lower as AI regulation fears weighed on the mining and tech sectors. The benchmark S&P/ASX 200 dropped 0.49% to 9,020.80, while the broader All Ordinaries index ended down 0.66% at 9,144.70.

Shares of Australian investment bank Macquarie Group tumbled 3.7% despite posting record first-half profit.

New Zealand’s benchmark S&P/NZX-50 index fell 0.66% to 13,998.50 after the release of weak housing data and amid US data centre woes.

On Thursday, US stocks crashed after celebrating the election result a day before on optimism that a divided Congress could limit policy shocks, temper spending and reduce some of the economic risks.

While the midterm elections helped remove uncertainty, fresh doubts have emerged over the speed at which data centres could be approved, powered and built.

The Nasdaq Composite nosedived 5.5%, marking its largest single-day drop in 19 months and confirming a technical correction on concerns about whether the huge amounts being spent on AI will pay off.

The S&P 500 plummeted 4.4% to mark its worst performance since the April 2025 tariff meltdown as Texas governor-elect Gina Hinojosa called for a longer data centre moratorium in the state, followed by tighter regulation. The narrower Dow tumbled 3.4%.