HONG KONG: Asian markets sank on Friday (Jul 24) to track a sell-off on Wall Street as world markets are battered by a perfect storm of the resurgent Middle East war, a spike in oil prices back past US$100 and worries about the artificial intelligence investment boom.
While traders in the past have been able to offset the bad news in one area by focusing on the positives elsewhere, analysts said they were now struggling to firefight on three fronts.
Tech firms were once again bearing the brunt of the selling owing to growing concerns about the colossal sums ploughed into AI hardware, factories and research, with many now questioning when they will see returns.
And it has been the big beasts that have taken the heaviest blows – having pummelled their way to multiple record highs in the past two years – with US Magnificent Seven titans being joined by South Korean and Japanese giants on the block.
The latest blows came on Thursday as Google-parent Alphabet and Tesla came under scrutiny for massive capital spending drives. Alphabet dived almost 7 per cent, and Tesla plunged more than 14 per cent.
Meta, Microsoft, and Amazon had already flagged that they would fork out more than US$700 billion this year on AI ambitions, and are due to report next week.
The Magnificent Seven on Thursday suffered their biggest one-day drop since the tariff tantrum in April 2025, with an index of the group shedding almost US$800 billion in market value.
“A relatively small number of companies have driven a disproportionate share of returns in recent years,” wrote Angelina Lai at St. James’s Place Asia and Middle East.
“As expectations rise and markets become more selective, future outcomes are likely to depend less on exposure to a theme and more on which businesses can translate investment into sustainable earnings growth and attractive returns on capital.”
Hefty selling on Wall Street bled through to Asia, where Seoul dived more than 3 per cent as chipmakers were hammered. Samsung and SK Hynix gave more than 7 per cent.
Tokyo’s Nikkei index was sharply lower, with Kioxia tanking almost 10 per cent, Advantest off more than 5 per cent down and Tokyo Electron almost 7 per cent lower.
