Asian markets extended losses on Thursday after U.S. stocks posted their worst single-day drop in nearly a month, weighed down by a sell-off in the artificial intelligence (AI) sector.
Traders are awaiting two key events: the release of U.S. monthly inflation data later in the day and the Bank of Japan's interest rate decision on Friday. Despite Japan's economic contraction in the July-September quarter, markets widely expect the central bank to raise rates by 25 basis points to curb inflationary pressures.
Tokyo's Nikkei 225 fell 1% to close at 49,001.50, with tech stocks leading the decline. SoftBank Group dropped 4%, while chipmaker Tokyo Electron slid 3.2% and semiconductor testing equipment firm Advantest declined 3.3%.
Honda Motor shares fell 2.2% after reports that the automaker would suspend production at some plants in Japan and China due to chip shortages.
South Korea's KOSPI index dropped 1.5% to 3,994.51, dragged down by selling in electronics and automakers. LG Electronics lost 3.1%, while Samsung Electronics edged down 0.3%.
Chinese markets were mixed: Hong Kong's Hang Seng Index dipped 0.3% to 25,385.93, while the Shanghai Composite rose 0.3% to 3,880.49. Australia's S&P/ASX 200 was flat at 8,588.20.
Later on Thursday, the U.S. government will release inflation data for the previous month. Economists expect the figures to show consumer prices remain above ideal levels.
On Wednesday, the S&P 500 fell 1.2% to 6,721.43, the Dow Jones Industrial Average declined 0.5% to 47,885.97, and the Nasdaq Composite dropped 1.8% to 22,693.32.
Although slightly more S&P 500 components rose than fell, steep losses in AI-related stocks dominated market moves. The sector faces multiple pressures: concerns about stretched valuations in big tech, doubts over whether massive AI investments will generate sufficient returns, and worries about high leverage at some companies expanding into AI.
Broadcom slid 4.5%, Oracle tumbled 5.4%, and CoreWeave plunged 7.1%. Chip giant Nvidia, whose massive market cap gives it outsized influence on Wall Street, dropped 3.8%—the biggest drag on the S&P 500.
Power companies, which rallied earlier this year on expectations of surging data center electricity demand, also lost appeal. Constellation Energy fell 6.7%.
Oil stocks bucked the trend after former U.S. President Trump ordered sanctions on tankers entering Venezuela, boosting crude prices. U.S. benchmark oil futures rose 1.2% to $55.94/barrel after hitting 2021 lows the previous day. In early Thursday trading, U.S. crude gained 51 cents to $56.32, while Brent crude added 49 cents to $60.17 after Wednesday's 1.3% rise.
The oil rebound lifted ConocoPhillips 4.6%, Devon Energy 5.3%, and ExxonMobil 2.4%. Crude had declined for most of the year on expectations of oversupply.
Streaming giant Netflix edged up 0.2% after Warner Bros. Discovery's board recommended shareholders approve Netflix's bid for its Warner Bros. unit over Paramount-Skydance's hostile takeover attempt for the whole company. Warner Bros. Discovery fell 2.4%, while Paramount-Skydance dropped 5.4%.
In early Asian FX trading, the dollar rose to 155.90 yen from 155.70, while the euro edged up to $1.1746 from $1.1743.
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