Asian Stock Markets Today: Kospi Crashes 6%, Nikkei Sinks 3% As SK Hynix Leads Tech Rout

Asian equities tumbled on Thursday, with South Korea's Kospi falling 5.72% and Japan's Nikkei 225 losing 3.11%, as a sell-off in technology stocks spread from Wall Street to regional markets. Australia's S&P/ASX 200 declined 0.45%, while the Hang Seng Index and Shanghai Composite were unchanged.

Semiconductor companies led the losses as investors reassessed the outlook for artificial intelligence spending amid persistent inflation and the prospect of higher US interest rates. Concerns that expensive borrowing could weigh on funding for AI infrastructure have added to pressure on companies that have benefited from the sector's investment boom.

SK Hynix fell more than 8%, while Samsung Electronics slid 7.1%. The declines extended beyond South Korea's largest chipmakers, with technology-related shares across the region also recording steep losses.

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Chip Stocks

Selling spread across semiconductor manufacturers, equipment suppliers and other technology companies.

LG Innotek dropped 8.1%, Seoul Semiconductor declined 7.7% and Samsung SDI lost 6.8%. In Japan, SoftBank Group fell 7.9%, while Advantest, which makes semiconductor testing equipment, shed 6.9%. Tokyo Electron and Renesas Electronics each declined 5.4%.

The retreat highlights growing uncertainty over whether technology companies can sustain their current pace of AI-related investment if financing costs rise further. The expansion of AI computing capacity requires substantial capital spending, leaving companies exposed to changes in borrowing costs and investor expectations about future returns.

The latest losses also come after a strong run for AI-linked shares, increasing the pressure on valuations as investors reconsider the risks associated with the sector.

Wall Street Sell-Off

Asian markets followed Wall Street lower after US equities fell on Wednesday, with technology shares accounting for much of the decline.

The Nasdaq Composite dropped 1.88% to close at 26,692.87. The S&P 500 fell 1.11% to 7,718.94, while the Dow Jones Industrial Average slipped 0.09%.

The selling followed the release of US inflation figures that exceeded expectations. The consumer price index rose 0.6% in September from August and was up 3.7% from a year earlier, according to the Bureau of Labor Statistics.

Higher fuel costs contributed to the monthly increase, while a measure of underlying inflation also came in above forecasts. The data suggested that price pressures remain difficult to contain, with elevated energy costs adding to the challenge.

Macro Outlook

The stronger inflation reading prompted traders to increase their bets on further Federal Reserve rate hikes. Investors are considering the possibility of additional tightening even if the central bank keeps rates unchanged at its October meeting.

Higher interest rates can weigh on technology shares by making future earnings less valuable in present-day terms. They can also increase the expense of financing data centres, semiconductor capacity and other infrastructure required to support AI development.

US Treasury yields initially moved higher after the inflation figures were released but subsequently reversed most of their losses as investors showed interest in bonds offering yields close to multi-year highs.

Persistent inflation, expensive energy and uncertainty over the Federal Reserve's next steps have therefore created a more difficult backdrop for equities. For technology stocks, the immediate concern is whether companies can maintain ambitious investment plans while borrowing costs and scrutiny of AI spending increase.

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