Asian stocks slide as Middle East jitters hit Korea, AI names weigh on Nikkei
The reversal in Korean equities, from an early rally back to sizeable losses, highlights how sensitive regional risk appetite remains to any fresh Middle East headline, in this case reports of a potential Hormuz shipping restriction alongside renewed Houthi activity against Saudi Arabia. That combination is likely to keep a bid under oil and the dollar while weighing on risk-sensitive Asian currencies, including the Australian dollar given its correlation with regional equity sentiment. In Japan, the divergence between a resilient Topix and a weaker Nikkei points to rotation out of AI and chip-linked names rather than a broad based selloff, while SoftBank’s decline despite beating profit expectations shows investors are looking past headline earnings for a clearer growth signal. Chipmakers across the region, including SK Hynix, remain exposed to both the AI trade unwind and any escalation in Gulf tensions that further pressures global risk sentiment.
Earlier:
Just as Korean stocks looked set for a strong session, fresh Middle East headlines turned an early rally into a broad decline, while Tokyo’s chip and AI names dragged the Nikkei lower even as SoftBank’s earnings beat failed to convince investors.
Summary:
- Japan’s Nikkei fell around 1% on Friday as losses in AI and chip related stocks outweighed broader gains, while the Topix was roughly flat
- SoftBank Group dropped around 4% despite posting a smaller than expected profit decline of around 18% for the first quarter, with the results seen as failing to provide fresh catalysts for the stock
- South Korea’s KOSPI opened up more than 1% and briefly recovered to around the 6,400 level, before turning lower roughly an hour later
- The reversal followed reports that Iran may restrict US and Israeli ships from passing through the Strait of Hormuz, along with news of a Houthi attack on southern Saudi Arabia
- SK Hynix fell by around 5%, while Samsung Electronics was slightly lower
- The KOSDAQ also gave back its opening strength, trading around 778 and down close to 3% on the day
Asian equities turned lower on Friday as renewed Middle East tensions overshadowed early gains, with Japan’s chip and AI related stocks weighing on the Nikkei and Korean shares reversing a strong opening session. The Nikkei fell around 1% as losses in technology names outpaced broader market strength, while the Topix, less exposed to the AI trade, was roughly flat on the day.
SoftBank Group was among the session’s notable decliners, dropping around 4% even after the technology investor posted a smaller than expected profit decline of around 18% for the first quarter a day earlier. Despite beating market consensus, the results were seen as offering little to lift the shares further, with one market participant noting the numbers failed to provide fresh cues that could support the stock price beyond the initial earnings reaction.
In South Korea, the KOSPI opened firmly higher, up more than 1% and briefly touching the region of the 6,400 level, extending gains even after a weak overnight session on Wall Street. That strength faded roughly an hour into trading, however, as geopolitical risk in the Middle East resurfaced. Reports that Iran may move to restrict US and Israeli vessels from transiting the Strait of Hormuz, followed by news that Houthi rebels in Yemen had struck southern Saudi Arabia, weighed heavily on sentiment and sent the index into decline.
Chipmakers bore the brunt of the reversal, with SK Hynix falling by around 5% and Samsung Electronics also slipping, albeit by a smaller margin. The KOSDAQ mirrored the broader retreat, giving back its early strength to trade around 778, down close to 3% on the day. The synchronised pullback across Korean equities underscored how quickly renewed Gulf security concerns can offset otherwise constructive market conditions, even after a session that had opened with clear upward momentum.
This article was written by Eamonn Sheridan at investinglive.com.