Asian markets have experienced a downturn, particularly with South Korea's Kospi index dropping nearly 8%. This decline comes despite a rise in artificial intelligence (AI) stocks that had previously bolstered markets in the U.S.
In Seoul, the Kospi fell 7.6% to close at 7,444.13, largely due to significant losses from major companies like Samsung Electronics and SK Hynix, which both saw their shares plummet by 8.7%. This drop is particularly striking considering that Samsung recently reported a staggering 19-fold increase in its operating income, reaching 89.4 trillion won (approximately $58.7 billion) in the last quarter, along with a more than doubling of its revenue.
Market analysts like Stephen Innes from SPI Asset Management have observed that the anticipated stress test for AI stocks may not arise from declining demand or capex warnings, but rather from a scenario where a company like Samsung posts excellent financial results yet still sees its stock price fall.
This week, SK Hynix aims to gauge investor interest in the AI sector with plans to raise $28 billion through a stock sale, set to trade on the Nasdaq in the U.S. This offering would follow closely behind SpaceX's recent IPO, which raised $75 billion, marking one of the largest stock offerings in U.S. history.
Despite experiencing a rollercoaster ride this year, SK Hynix's stock has more than tripled thanks to the AI boom, although it has faced sharp declines in recent trading sessions.
Meanwhile, Japan's Nikkei 225 saw a 1.8% drop to 68,493.52. Chip manufacturers Tokyo Electron and Kioxia Holdings experienced losses of 3.4% and 10.7%, respectively. In Hong Kong, the Hang Seng fell 0.4% to 23,517.70, while the Shanghai Composite dropped 1% to 3,999.03. Taiwan's Taiex also lost 1.8%. In Australia, the S&P/ASX 200 decreased by 0.3%, whereas India's Sensex ticked up 0.1%.
On the U.S. side, the S&P 500 increased by 0.7% to 7,537.54, nearing its all-time high, despite most of its constituent stocks declining. The robust performance of AI-related companies propelled the Nasdaq composite up by 1.1% to 26,121.16, while the Dow Jones Industrial Average set a record by climbing 0.3% to 53,055.91.
Broadcom significantly contributed to the S&P 500's rise, gaining 3.7% after announcing long-term contracts to supply silicon products to Apple. This positive movement came after the company had faced some losses previously during trading sessions.
SpaceX, which is set to join the Nasdaq 100 index, saw its stock dip by 1% after initially gaining, in the final trading session before its inclusion, which will necessitate purchases by tracker funds like the QQQ ETF.
In the AI arena, TeraWulf's stock rose by 4.9% following news of a 20-year agreement with Anthropic to utilize its data center in Kentucky, a deal expected to generate approximately $19 billion in revenue as TeraWulf shifts its focus from bitcoin mining to high-performance computing.
In the oil markets, Brent crude prices increased by 52 cents, reaching $72.51 a barrel, approaching levels seen before recent military actions involving the U.S. and Israel against Iran, which had previously caused price surges. However, the stability of oil supplies remains uncertain, especially with reports of a tanker catching fire off Oman after being struck by a projectile.
U.S. benchmark crude added 43 cents to reach $68.98 a barrel. In the currency exchange arena, the U.S. dollar fell against the Japanese yen, now valued at 161.73 yen, while the euro slipped slightly to $1.1439.
