Market Overview
On Thursday, 2 July 2026, Asian equity markets opened sharply lower as a fresh sell‑off in AI‑linked semiconductor stocks spread across the region. South Korea’s benchmark KOSPI plunged up to 7%, marking its steepest decline in months. The drop was led by heavyweight memory makers Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), which extended losses after a weak overnight session on Wall Street.
Drivers of the Sell‑off
The market reaction intensified after reports that Meta Platforms Inc (NASDAQ:META) is exploring a cloud‑infrastructure business to sell AI computing capacity, prompting concerns that hyperscale AI spending could become more disciplined. In parallel, Apple Inc (NASDAQ:AAPL) was reported to be evaluating memory chips from Chinese suppliers, further weighing on sentiment toward South Korea’s dominant memory producers. U.S. memory manufacturers Micron Technology Inc (NASDAQ:MU) and SanDisk Corporation (NASDAQ:SNDK) each fell more than 10% in overnight trading, reinforcing the negative tone.
Regional Impact
The weakness quickly rippled through the broader semiconductor supply chain. Japan’s Nikkei 225 index fell 1.5% even as the TOPIX edged 0.2% higher. Memory producer Kioxia Holdings plunged more than 14%, one of the largest single‑day declines on the benchmark, while chip‑packaging supplier Ibiden Co Ltd (TYO:4062) dropped over 10%. Electronic component makers Murata Manufacturing Co (TYO:6981), Furukawa Electric Co Ltd (TYO:5801) and Mitsui Mining and Smelting Co (TYO:5706) also fell sharply as investors trimmed exposure to AI‑related suppliers. Taiwanese chip‑related firm Taiwan Styrene Monomer Corp (TW:1310) extended recent losses amid the broader reassessment of lofty sector valuations.
Counter‑balancing Markets
Mainland Chinese markets showed relative resilience; the Shanghai Composite gained 0.4% and the Shanghai‑Shenzhen CSI 300 slipped 0.4%, supported by stronger manufacturing activity and expectations of further policy support. Australian trade data released the same day showed a wider‑than‑expected May trade surplus, with imports rebounding strongly while exports eased only slightly, yet the S&P/ASX 200 was largely unchanged, rising 0.1%. Indonesia’s Jakarta Stock Exchange Composite Index rose 0.9% and Nifty 50 futures edged up 0.2%. Earlier factory surveys across China, Japan and much of Southeast Asia painted a broadly resilient picture of manufacturing activity. South Korea’s latest inflation data matched expectations, indicating stable price pressures, and export growth continued to underscore the resilience of the country’s external sector.
Outlook and Caution
Investors remained cautious ahead of remarks from U.S. President Donald Trump later on Thursday, watching for any comments on trade and economic policy that could influence global risk sentiment.
Reporting by Roushni Nair