Technology stocks in Asia faced a sharp selloff on Friday, as investors pulled back from industry giants following a strong rally earlier in the year. The Kospi Index in South Korea, a key indicator for the artificial intelligence sector, dropped 2.8%, marking its worst performance since April. This decline contributed to a broader regional equities downturn, with MSCI Inc.’s gauge falling for a second consecutive day. The negative sentiment also spread to US equity-index futures, with Nasdaq 100 contracts down 0.1% after the index experienced its worst session since late June.
The selloff in AI-related stocks drove investors toward safer assets like Treasuries and the Japanese yen. The benchmark 10-year Treasury yield, which had fallen 17 basis points the previous day, traded at 4.96%. Government debt in Japan and Australia followed the upward trend in Treasuries. Meanwhile, the yen gained 0.4% to 156.20 per dollar, outperforming all its major counterparts as traders sought haven assets.
Oil prices remained volatile after a 4% surge in the previous session, triggered by deadly attacks in Saudi Arabia. Brent crude traded just below $113 a barrel, while gold held onto its losses from Thursday, when it slumped 2.8%. Technology megacaps, which had fueled a four-year bull run in US equities, bore the brunt of the selling. Earnings reports from major companies like Microsoft, Amazon, and Alphabet are expected to provide further clarity next week, alongside the Federal Reserve’s policy decision.
Analysts noted a shift in investor sentiment, with a growing focus on capital preservation over returns. Eugene Leow, senior rates strategist at DBS Bank Ltd., observed that investors are reconsidering AI-related assets and seeking safety in Treasuries amid elevated US yields. Meanwhile, Chinese stocks remained in focus after a significant decline pushed them into a bear market, with Alibaba Group Holding Ltd. experiencing its steepest drop in two months.