Asian and European technology shares declined across the board at the start of the trading week, as investors moved to offload stocks linked to artificial intelligence.
This follows a drop of over 4.5% last week for the tech-heavy Nasdaq Composite index.
According to a UOB research report, "This tech-led sell-off has erased approximately US$1.8 trillion from the total market capitalization of the S&P 500 index."
Influenced by the Nasdaq's sharp decline last week, global investor confidence in AI-themed stocks has been shaken, leading to continued selling pressure on Asian and European tech shares on Monday, June 8th.
In South Korea, major index components and memory chip giants Samsung Electronics Co Ltd and SK Hynix Inc closed down sharply by 10.18% and 7.68%, respectively. These two firms collectively account for over 40% of the weighting on the KOSPI index, dragging it to an intraday decline of up to 8%.
Taiwan Semiconductor Manufacturing Company Ltd (TSMC) fell 2.96%, while Hon Hai Precision Industry Co Ltd (Foxconn) tumbled 5.27%.
In Japan, technology investment conglomerate SoftBank Group Corp plunged 6.1%, with Tokyo Electron Ltd and Advantest Corp dropping 7.45% and 5.72%, respectively.
European chip stocks followed their Asian counterparts lower at the market open, with ASML Holding NV, Infineon Technologies AG, STMicroelectronics NV, ASM International NV, and BE Semiconductor Industries NV all falling between 3% and 4.5%.
Last week's U.S. employment data, which was significantly stronger than market expectations, has led to a widespread view that the period of high U.S. interest rates will be extended. This has boosted risk-off sentiment, amplifying the tech stock decline.
Goldman Sachs stated in a report last Friday, "We have pushed back our expectations for the final two Fed rate cuts to June and December 2027, as the U.S. labor market has performed far better than previously anticipated."
Prior to this sell-off, Asian tech stocks had experienced a rally, primarily driven by optimistic market expectations for the future demand of artificial intelligence. Last month, the market capitalizations of Samsung Electronics and SK Hynix each surpassed the US$1 trillion mark, and SoftBank briefly became Japan's most valuable company.
The trigger for the current wave of selling in tech stocks was Broadcom Inc's reported revenue for its fiscal Q2 2026, which fell short of market expectations last week. The company's stock price plummeted, sparking a chain reaction across the broader technology sector.
The VanEck Semiconductor ETF (ticker: SMH) fell over 9% last Friday. Arm Holdings plc, the UK chip designer majority-owned by SoftBank, dropped nearly 13%, while Micron Technology Inc declined over 13%.
A UOB report on Monday noted, "This market rout, led by technology stocks, has wiped about US$1.8 trillion from the S&P 500's market value."
However, UOB also indicated that the technology and software sectors will remain a key focus for the market, stating, "On Friday, June 12th, a company that blends space exploration, artificial intelligence, and cutting-edge technology is set to list on the Nasdaq, with its IPO potentially setting a record for the largest ever."
Amid news of renewed escalation in the Iran situation and the expectation that the conflict will be difficult to resolve in the near term, major Asian equity benchmarks also moved lower on Monday.
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