Asian stock markets opened lower on Friday as renewed selling in global technology stocks weighed on investor sentiment, with Japanese equities leading regional declines after another weak session for semiconductor shares on Wall Street.
Japan's Nikkei 225 fell 3.82%, Australia's ASX 200 declined 0.71%, while China's Shanghai Composite edged 0.07% lower. South Korean markets were closed for a holiday.
The regional weakness followed another selloff in U.S. chipmakers, extending a pullback that has intensified concerns over whether the rapid rise in artificial intelligence-related stocks can be sustained. Asian equities have now declined for a second straight session as investors reassess whether record spending on AI infrastructure will generate returns that justify current valuations.
Technology shares remained under pressure after a widely followed U.S. semiconductor index dropped more than 4% on Thursday. Alphabet also fell 4.4% after reports suggested Google's flagship artificial intelligence model could face further delays, adding to concerns surrounding the sector.
Investors are increasingly questioning whether the billions of dollars being committed to artificial intelligence will translate into meaningful earnings growth. The four largest U.S. AI companies are expected to spend more than $725 billion this year, keeping scrutiny on upcoming corporate earnings for evidence that those investments are beginning to pay off.
Geopolitical tensions also remained a key concern. Brent crude has climbed nearly 12% this week, marking its strongest weekly advance since April, as the conflict in the Middle East continued to fuel worries about energy supplies and inflation. Higher oil prices have added another layer of uncertainty for investors already navigating volatility in technology stocks.
Economic data from the United States offered a mixed picture. Initial jobless claims declined last week, pointing to continued resilience in the labour market, while retail sales posted a modest increase in June. However, weaker receipts at petrol stations tempered the headline figure despite stronger spending across several retail categories.
With questions mounting over AI valuations and geopolitical risks continuing to support oil prices, investors are likely to remain focused on upcoming corporate earnings and economic data for clearer direction on global markets.
(With inputs from Bloomberg.)
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