Asia shares drop significantly as Wall Street loses due to AL-related worries among investors
Hong Kong (AP) — Shares in Asia were mostly down Friday, as investors reacted to the steep fall of tech stocks in the US, fearing that AI disruptions will lead to huge losses for companies dependent on technology. US futures are mostly stable. The Nikkei 225 in Tokyo fell 0.8% to 57,165.13 on Friday after reaching a new record high above the 58000 mark on Thursday morning before closing around 57500.
The stocks of SoftBank Group, despite its heavy investment in OpenAI, dropped by 6.8% on Friday. South Korea’s Kospi rose 0.4% to 5,545.49; it had previously broken the 5,500 mark on Thursday, supported by the growth of technology shares such as Samsung Electronics, which is the largest Kospi company by capitalization.
The Hang Seng in Hong Kong dropped 1.8% to close at 26,547.97. Meanwhile, the Shanghai Composite Index dropped 0.7% to end at 4105.04. In Australia, the S&P/ASX 200 lost 1.4% and traded at 8,919.30.
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On Thursday, the stock markets in the US experienced a significant decline due to fears related to AI. The S&P 500 had its second-worst day since the day after Thanksgiving, with a decrease of 1.6% or 108.71 points, to close at 6832.76, but still above the previous all-time high from last month. The Dow dropped 1.3% or 669.42 points, to close at 49451.98. The Nasdaq declined 2.0% or 469.32 points, closing at 22597.15.
Shares of Cisco Systems plummeted 12.3% after the company reported quarterly results that exceeded expectations; however, this was due to investors being nervous about Cisco’s ability to remain profitable over time.
AppLovin shares dropped 19.7% even though the company also posted higher-than-expected operating income because of concerns related to how artificial intelligence will affect them as well. Recent concerns about disruption from AI across multiple industries have negatively impacted investors’ confidence in companies in general and particularly in companies involved in software.
Some analysts anticipate that there will continue to be uncertainty regarding the risks associated with the AI disruption for the foreseeable future. Many continue to express apprehension about whether companies’ large investments in AI will turn out to be beneficial. Other analysts, however, are more optimistic about the future of AI.
Economists at Capital Economics have expressed confidence in the potential of the AI boom to generate positive returns for corporations and that the S&P 500 will have “a very good year” based on technology-driven growth so far this year. “We believe that any sustained reversal of tech outperformance would require a very significant decrease in tech itself to occur,” wrote Thomas Mathews, head of markets for APAC at Capital Economics, in an article published recently. “We see tech performing well.”
Other companies in the US market also performed well, including McDonald’s (+2.7%) and Walmart (+3.8%). Investors and economists are also awaiting the release of US inflation numbers due on Friday that may influence the Federal Reserve’s decisions regarding future interest rate adjustments, with most expecting a relatively low probability of having another rate cut through the next couple of months.
