Asian stock markets faced a downturn on Thursday, led by losses in the technology sector. This trend mirrored the decline in Wall Street, where Meta Platforms’ disappointing financial outlook for the second quarter prompted a sell-off in technology stocks. The company’s forecast of lower-than-expected revenue due to increased artificial intelligence costs raised concerns about the earnings potential of AI for tech companies. Meta’s outlook cast a negative shadow over upcoming earnings reports from Microsoft Corporation and Alphabet Inc. In Japan, the Nikkei 225 index suffered the most significant losses in Asia, plunging 1.8% due to declines in major technology stocks. The broader TOPIX index also fell by 1.1%, as sentiment towards Japanese markets was further dampened by anticipation of the Bank of Japan’s meeting on Friday. Although the BOJ is largely expected to maintain interest rates after a historic hike in March, investors remain cautious of any hawkish signals on inflation, particularly given recent indications of improving wage growth and economic resilience in Japan. The release of Tokyo consumer inflation data on Friday is also anticipated to show a modest increase in inflation through April. South Korea’s KOSPI index declined by 1% on Thursday, weighed down by losses in technology stocks. The weak lead from Wall Street overshadowed positive earnings reports and economic data. Memory chip manufacturer SK Hynix Inc.’s strong first-quarter earnings, driven by AI-fueled demand, were offset by a decline in its share price. The company predicted increased expenses as it ramps up production to meet anticipated demand growth. Samsung Electronics Co Ltd., another tech giant, also experienced a 1.9% decline. These two stocks constitute the largest components of the KOSPI. The weakness in tech stocks diminished optimism generated by GDP data indicating a 1.3% growth in the South Korean economy in the first quarter, exceeding expectations. Other Asian markets exhibited mixed performance. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes in China experienced slight declines, while Hong Kong’s Hang Seng index extended its rally, reaching five-month highs. Futures for India’s Nifty 50 index pointed to a muted open as investor sentiment cooled ahead of the country’s 2024 general elections, which commence on Friday. The incumbent BJP party is anticipated to secure a third consecutive term. Australian markets remained closed for a holiday.
Asian Stocks Drop as Tech Shares Tumble on Meta Outlook and Interest Rate Worries
