Market Overview

Most Asian equity markets traded lower on Wednesday as investors grew cautious on AI‑linked shares after a valuation‑driven semiconductor selloff. The Nasdaq 100 Futures rose 0.4% and S&P 500 Futures gained 0.1% in Asian trade, while Wall Street closed lower overnight.

Oil and Geopolitical Factors

Oil prices rose approximately 2.5% (LCO +2.58%) after the United States launched fresh strikes on Iran and tightened sanctions on Iranian oil exports following attacks on commercial shipping in the Strait of Hormuz. The higher crude price kept inflation concerns in focus across the region.

Semiconductor and AI Supply‑Chain Reaction

Samsung Electronics Co Ltd reported blockbuster earnings, which paradoxically triggered a broad sell‑off across Asia’s AI supply chain on Tuesday. Investors questioned whether soaring semiconductor valuations could be sustained by future earnings growth. OCBC analysts noted that AI will remain the dominant investment theme in the second half of 2026, but buying is likely to become more selective, with greater emphasis on earnings delivery relative to elevated valuations.

South Korea

In South Korea, the semiconductor complex rebounded: SK Hynix Inc jumped 5.1%, LG Innotek Co Ltd rose 2.1%, and Samsung Electronics edged up 0.5%. Despite these gains, the KOSPI index slipped 0.9% after having surged more than 100% during the first half of the year.

Taiwan

Taiwan’s tech‑heavy weighted index recovered 0.2%. Hon Hai Precision Industry Co Ltd (Foxconn) rose 0.4%, while Taiwan Semiconductor Manufacturing Co traded little changed after a more than 2% decline in the previous session.

Japan

Japanese technology suppliers recovered: Murata Manufacturing Co climbed 4.3% and TDK Corp gained about 2%, whereas Sony Corp slipped 0.5%. The broader Nikkei 225 fell 0.6% and the TOPIX eased 0.3%.

Regional Inflation and Central‑Bank Outlook

Inflation data from Thailand, Taiwan and the Philippines indicated easing headline price pressures. However, Maybank highlighted firmer core inflation in the Philippines, reinforcing its expectation that the Bangko Sentral ng Pilipinas will deliver another 25‑basis‑point rate hike at its August 27 policy meeting.

China and Hong Kong

Mainland Chinese shares were largely unchanged ahead of the June inflation report: the CSI 300 index was down 0.04% and the Shanghai Composite edged up 0.2%. Hong Kong’s Hang Seng index rose 1.1%, recovering alongside regional technology stocks.

Australia and New Zealand

Australia’s S&P/ASX 200 fell 1.3% after Reserve Bank of Australia Assistant Governor Sarah Hunter warned that recurring global supply shocks, including those linked to geopolitical conflicts, underscore the need to keep inflation expectations anchored. The Reserve Bank of New Zealand raised its benchmark interest rate by 25 basis points as widely expected, while the NZX 50 index slipped 0.6%.

Outlook

Markets will next focus on the Federal Reserve’s June meeting minutes, China’s June inflation data, Bank Negara Malaysia’s upcoming rate decision, and the U.S. consumer‑price inflation report for further clues on the global interest‑rate outlook. Corporate earnings will test whether the AI investment boom can continue to justify the semiconductor sector’s lofty valuations.