Asia report: Markets fall amid global technology sell-off

(Sharecast News) - Asia-Pacific markets closed lower on Tuesday amid a sell-off in global chip stocks, with the semiconductor pullback seen in Asia moving through into early European trading.

"AI is getting stress-tested, Korea is flashing red, Samsung's profit beat is not enough, Hormuz is back in the crude price, and the yen short has become dangerously crowded," said Patrick Munnelly, market strategy partner at TickMill.

Munnelly said Asian equities sold off sharply as renewed pressure in technology shares revived concerns that the AI-led rally had moved too far ahead of fundamentals.

"Markets are no longer simply asking whether the AI story is real; they are asking whether the price paid for that story has outrun the earnings, the policy support and the macro backdrop that investors need to keep chasing it," he said.

Oil rose in Asian trade amid concerns over renewed tensions in the Middle East after an oil tanker was hit near the Strait of Hormuz.

Axios reported that Iran had resumed attacks in the strait, while British maritime security agency UKMTO said an "unknown projectile" had struck and caused a fire on an oil tanker off the coast of Oman on Monday.

"Vessels are advised to transit with caution," UKMTO said.

Brent crude futures were last up 1.21% on ICE at $72.86 per barrel, while the NYMEX quote for West Texas Intermediate gained 1.12% to $69.32.

Munnelly said the incident revived regional security concerns despite the late-June peace agreement and underlined why markets had been too quick to fully discount the Hormuz risk premium.

"Shipping flows may have improved, but one projectile is enough to remind investors that energy tail risk has not disappeared," he said.

Tokyo falls as tech stocks come under pressure

Japan's Nikkei 225 fell 2.12% to 68,256.96, while the broader Topix declined 0.97% to 4,062.26.

Sumco Corporation dropped 11.62%, Kioxia Holdings lost 11.26%, and Taiyo Yuden fell 11.04%.

Technology stocks were under pressure in Tokyo, with SoftBank Group down 3.48%, Advantest falling 2.25%, Tokyo Electron losing 3.94%, Murata Manufacturing dropping 10.13%, and industrial robotics maker Fanuc declining 5.42%.

Munnelly said the weakness was bleeding into global risk appetite, with Nasdaq 100 futures down 1.1% and European markets set for a softer open.

"The message is not outright panic, but the leadership is wobbling," he said.

"When the highest-beta AI proxies stop responding to positive news, broader indices lose their most important momentum engine."

Sapporo Breweries bucked the trend, rising 7.91% after saying it would form a joint venture with Carlsberg to strengthen its presence in the beer industry across Southeast Asia and Hong Kong.

Sapporo will invest about $643m to acquire a 25% stake, with the investment expected to generate returns of more than 12%.

The partnership will cover additional markets including Laos, Vietnam and Cambodia, and Sapporo said it aimed to increase sales volume of Sapporo Premium Beer in the target markets to about 10 times the 2025 level by 2035.

Japan's household spending meanwhile fell 0.4% year on year in May, after a 0.5% decline in April, but beat expectations for a 2.5% drop.

It marked the sixth consecutive month of contraction, although the decline was the softest in the sequence.

Spending remained weak on transport and communication, utilities, and culture and recreation, while expenditure rose on food, housing, furniture and household goods, healthcare, clothing and footwear, and education.

On a seasonally adjusted monthly basis, household spending rose 3.7%, accelerating from 1.3% in April and beating forecasts for 1.4%, marking the fastest monthly increase since November.

Seoul leads rest of Asia lower

In China, the Shanghai Composite fell 1.26% to 3,990.24, while the Shenzhen Component dropped 1.24% to 15,225.11.

Heilongjiang Interchina Water Treatment declined 10.26%, Beijing Capital Development lost 10.08%, and Shanghai Dragon fell 10.05%.

Hong Kong's Hang Seng Index slipped 0.51% to 23,496.89.

Kuaishou Technology dropped 12.04% after Bloomberg reported that major shareholder Tencent had sold a $1.5bn stake in the short-video company.

Tencent reportedly sold 273 million shares at HKD 43.25 each, a 6% discount to Kuaishou's close on Monday.

BYD Electronic International fell 4.87%, while CMOC Group lost 4.76%.

South Korea's Kospi 100 plunged 5.28% to 9,605.61 as technology stocks came under heavy pressure.

Hanwha Ocean slumped 22.65% after losing its bid to build Canada's next fleet of submarines, with Canadian prime minister Mark Carney naming Germany's Thyssenkrupp Marine Systems as the preferred supplier.

The contract had been estimated at up to $100bn over three decades, according to the Korea Times.

Hanwha Systems dropped 12.98%, while Samsung Electro-Mechanics lost 9.85%.

Samsung Electronics fell 6.92% even after forecasting a record second-quarter profit, while SK Hynix dropped 6.06%, Samsung SDI lost 1.44%, and LG Display was flat.

The South Korean exchange triggered a circuit breaker for the main Kospi, halting trading for about 20 minutes after the index fell more than 8%, while the small-cap Kosdaq lost more than 3%.

Chosun reported that it was the sixth circuit breaker activation this year.

Munnelly said the sharpest damage was in South Korea, where the Kospi slump had turned what looked like routine profit-taking into "a full-blown positioning flush".

"Samsung was the clearest warning that good news is no longer good enough," he said.

"The stock dropped 10% despite reporting a 19-fold surge in profit, a classic sign that expectations had already moved beyond the reported number."

Sydney in the red, Wellington nearly flat

Heading down under, Australia's S&P/ASX 200 fell 0.31% to 8,803.90.

Liontown Resources dropped 7.55%, Lynas Rare Earths lost 6.37%, and New Hope Corporation declined 6.26%.

New Zealand's S&P/NZX 50 was nearly flat, edging down 0.002% to 13,762.79.

Pacific Edge fell 3.45%, Oceania Healthcare lost 2.67%, and Air New Zealand declined 2.25%.

Dollar mixed against regional G10 peers

In currencies, the dollar was last down 0.13% on the yen to trade at JPY 161.88, as it rose 0.16% against the Aussie to AUD 1.4401, and gained 0.15% on the Kiwi to change hands at NZD 1.7567.

Reporting by Josh White for Sharecast.com.