Hong Kong – Asian markets sank Friday to track a selloff on Wall Street as world markets are battered by a perfect storm of the resurgent Middle East war, a spike in oil prices back past $100 and worries about the AI investment boom. While traders in the past have been able to offset the bad news in one area by focusing on the positives elsewhere, analysts said they were now struggling to fire-fight on three fronts. Tech firms were once again bearing the brunt of the selling owing to growing concerns about the colossal sums ploughed into artificial intelligence hardware, factories and research, with many now questioning when they will see returns.
And it has been the big beasts that have taken the heaviest blows — having pummelled their way to multiple record highs in the past two years — with US Magnificent Seven titans being joined by South Korean and Japanese giants on the block. The latest blows came Thursday as Google-parent Alphabet and Tesla came under scrutiny for massive capital spending drives. Alphabet dived almost seven percent and Tesla plunged more than 14 percent.
Meta, Microsoft, and Amazon had already flagged that they would fork out more than $700 billion this year on AI ambitions, and are due to report next week. The Magnificent Seven on Thursday suffered their biggest one-day drop since the tariff tantrum in April 2025, with an index of the group shedding almost $800 billion in market value. “A relatively small number of companies have driven a disproportionate share of returns in recent years,” wrote Angelina Lai at St.
James’s Place Asia and Middle East. “As expectations rise and markets become more selective, future outcomes are likely to depend less on exposure to a theme and more on which businesses can translate investment into sustainable earnings growth and attractive returns on capital.” Hefty selling on Wall Street bled through to Asia, where Seoul dived more than three percent as chipmakers were hammered. Samsung and SK hynix gave more than seven percent.
Tokyo’s Nikkei index was sharply lower, with Kioxia tanking almost 10 percent, Advantest off more than five percent down and Tokyo Electron almost seven percent lower. – Tariffs revisited – Hong Kong, Shanghai, Sydney, Singapore, Taipei and Manila were also well down. The AI crisis was compounded by fresh worries that the re-escalation of hostilities in the Middle East will a…
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