Asian share markets tumbled on Friday as investors took profits on technology stocks and turned defensive ahead of the weekend, wary of the flare-up in Middle East hostilities with U.S.-Iran peace talks in limbo.
The Iran-backed Hezbollah militia rejected a new ceasefire in Lebanon on Thursday and Israel said it would not withdraw troops from the country, undermining U.S. President Donald Trump's efforts to halt fighting there and reach a peace deal with Tehran.
Meanwhile, an AI-driven selloff after chipmaker Broadcom reported underwhelming results on Wednesday continued into a second day.
All that left MSCI's broadest index of Asia-Pacific shares outside Japan down 1.8% in Asian trade. South Korea's tech-heavy Kospi plunged as much as 7% and Japan's Nikkei fell 1.6%.
"(It) seems like quite a risk-off today," said Charu Chanana, chief investment strategist at Saxo.
"Korea has been one of the biggest beneficiaries of the AI memory supercycle, so when Broadcom disappointed on AI expectations, investors quickly de-risked the whole semiconductor chain," she said.
"The issue is not that AI demand has disappeared - it is that expectations had become extremely high, and even good numbers are no longer enough unless guidance keeps moving higher."
Nasdaq futures fell 1.1% and S&P 500 futures eased 0.6%, after a mixed session on Wall Street overnight. EUROSTOXX 50 futures slipped 0.1%, while DAX futures lost 0.4% and FTSE futures were flat.
Cryptocurrencies extended recent declines, with bitcoin shedding 1.4% to $62,725.54 and heading for a weekly decline of 15%, its biggest since the week FTX collapsed in November 2022, while ether was down 2.3% at $1,732.09.
Oil set for weekly gain
Oil prices were little changed on Friday as traders awaited more clarity on U.S.-Iran negotiations, though were set for a weekly gain as hostilities earlier in the week raised concerns of a prolonged energy shock.
Brent crude futures rose 0.4% to $95.38 a barrel and are on track to rise more than 3.5% for the week, while U.S. crude edged up 0.1% to $93.12 per barrel, and was similarly set to advance more than 6.5% this week.
Kristian Kerr, head of macro strategy at LPL Financial, said markets were underestimating the complexities involved in restoring shipping through the Strait of Hormuz to pre-war levels, even if Washington and Tehran reach a memorandum of understanding.
"Any early increase in barrels is likely to come from already produced crude, including crude sitting on stranded or floating vessels and Iranian cargoes in storage, rather than a sustained restart in production or exports," he said.
"In other words, this is more about clearing existing bottlenecks than reflating the supply base."
Eyes on US nonfarm payrolls
In currencies, the dollar was on track for a 0.5% weekly rise supported by the Middle East conflict.
The yen languished near the 160 per dollar level and was last 0.1% stronger at 159.95, as Japanese officials ramped up warnings on the ailing currency, keeping traders on alert for further intervention from Tokyo.
Data on Friday showed Japan's foreign reserves fell by $77 billion in May.
In other currencies, the euro last bought $1.1614, while sterling was little changed at $1.34265.
Focus now turns to the closely watched U.S. nonfarm payrolls data due later in the day.
Market forecasts are for a solid rise of 85,000 in employment, keeping the jobless rate steady at 4.3%. Anything stronger would likely see the odds of a Federal Reserve rate hike narrow further.
Elsewhere, spot gold was down 0.8% at $4,439.91.
(Reporting by Rae Wee; Editing by Kate Mayberry)
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