Market Overview
Asian equity markets fell on Friday, with Japan's Nikkei 225 sliding 4% and the broader TOPIX down 2.6%, marking the steepest regional decline. The slide followed a weak lead‑in from Wall Street where S&P 500 futures fell 0.5% in Asian trade, and hawkish comments from Federal Reserve officials heightened rate‑rise anxiety.
Technology Sector Impact
Chip‑related shares bore the brunt of the sell‑off. Taiwan Semiconductor Manufacturing Co (TSMC) dropped 5% in Taiwan trading after the company highlighted continued AI‑driven demand but warned of a sharp increase in its capital‑expenditure outlook, unsettling investors. Murata Manufacturing Co (TYO:6981) fell 11.73% and Kioxia Holdings Corp (TYO:285A) plunged 16.10% on the Nikkei, making them the major decliners among technology stocks.
Oil and Geopolitical Developments
Escalating U.S.–Iran tensions, including a sixth consecutive night of U.S. strikes on Iran, raised concerns over potential disruptions to oil flows through the Strait of Hormuz. Brent crude and U.S. West Texas Intermediate futures were on track for weekly gains exceeding 10%, the largest weekly advance since April, fueling worries that renewed energy‑inflation could complicate central‑bank outlooks. Recent U.S. inflation data reinforced expectations that the Federal Reserve will keep policy rates unchanged in the near term.
Regional Market Highlights
China's Shanghai Composite slipped 1.6% and the Shanghai‑Shenzhen CSI 300 fell 2.5%, while Hong Kong's Hang Seng index dropped 2%. South Korean markets remained closed for a public holiday after earlier steep losses. Australia's ASX 200 and Singapore's Straits Times Index each edged lower by about 0.5%. Singapore reported that key non‑oil exports grew less than expected in June after several months of strong growth. In contrast, India's Nifty 50 rose 0.6% in early trade.
Investor Sentiment
The combined effect of tech‑sector weakness, rising oil prices, and geopolitical risk prompted investors to rotate out of high‑valuation AI and semiconductor names toward more defensive sectors, even as analysts maintained a long‑term positive outlook for AI spending.