The Nifty IT index pared early gains to decline nearly 1% on Friday, June 5, dragged by weakness in key IT heavyweights including Tata Consultancy Services, Infosys, HCLTechnologies after global tech giants snapped the AI-driven rally. Shares of TCS, Infosys, HCLTech, Tech Mahindra dropped by 1-2% intraday on the NSE so far during the session. Asian tech stocks, including those in South Korea, Japan, and China plunged over 4% as the slump in Wall Street's tech stars overnight spread into Asia.
In morning trade, South Korea stocks plunged on Friday, leading losses in the region. The Kospi index was last down nearly 4.11%, with heavyweights Samsung Electronics and SK Hynix dropping 6% and 8%, respectively. The small-cap Kosdaq index fell over 2.41%. Japan's benchmark Nikkei 225 fell around 1.1%, while the Australia's S&P/ASX 200 index was 0.2% lower. Hong Kong's Hang Seng index also also last down 0.98%, while the CSI 300 declined 0.39%.
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Stocks also came under pressure on Middle East worries. Mixed messages have emerged recently out of negotiations to end the war, which has upset global markets and caused oil and gasoline prices to spike. Overnight in US markets, the Dow Jones Industrial Average rallied to a fresh all-time high, while the Nasdaq Composite underperformed as investors appeared to rotate out of chip names in favor of non-tech stocks. The 30-stock Dow jumped 874.86 points, or 1.73%, to close at a record 51,561.93. The Nasdaq lost 0.09% and ended at 26,830.96, while the S&P 500 rose 0.41% to 7,584.31.
The rotation was sparked by a sell-off in Broadcom that led investors to pare exposure to AI-linked stocks. The chipmaker slid more than 12% after its fiscal second-quarter revenue missed estimates. Chip names, which led the latest leg higher in the market's rally to record levels, fell broadly. Chipmaker Marvell Technology gained 4.9%, while Advanced Micro Devices, Micron Technology and Qualcomm fell between 2.6% and 7.7%. The VanEck Semiconductor ETF (SMH) lost more than 1%. Arm Holdings shed more than 4%, while Micron Technology fell close to 8%.
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