Asian Markets Retreat as Wall Street's Wild Ride Casts a Shadow
Asian stock markets closed mostly lower on Friday, echoing the turbulent sentiment from Wall Street where a dramatic sell-off in tech giant Microsoft sparked a day of sharp swings. The ripple effects underscored growing investor unease over lofty valuations and the profitability timeline for heavy investments in artificial intelligence.
Japan's Nikkei 225 fell 0.5% to 53,119.18, led lower by AI-related stocks. Advantest, a testing equipment maker, plunged 5.4%, while chip equipment firm Disco Corp. dropped 2.4%. The retreat was broader across the region: Hong Kong's Hang Seng index lost 1.1%, and the Shanghai Composite slipped 1.2%. Australia's S&P/ASX 200 edged down 0.3%. South Korea's Kospi was a notable exception, rising 1% to extend its record-breaking run.
The cautious tone followed a nerve-wracking session on Wall Street. The S&P 500 ultimately closed just 0.1% lower at 6,969.01 after whipsawing through the day, while the Nasdaq fell 0.7%. The spotlight, however, was fixed on Microsoft. Despite reporting better-than-expected quarterly results, its shares cratered 10%—the steepest single-day drop since the 2020 pandemic crash. Analysts pointed to investor jitters over soaring capital expenditures, potential slowing growth in its Azure cloud division, and concerns that its massive AI bets may take longer than hoped to materially boost profits.
"The market is sending a clear message: patience for 'spend now, profit later' narratives is wearing thin," said David Chen, a portfolio manager at Horizon Capital in Singapore. "Microsoft's stumble is a reality check for the entire AI-driven rally."
Tesla also weighed on sentiment, falling 3.5% after reporting a sharp year-on-year profit decline. The dip occurred even as CEO Elon Musk sought to redirect investor focus toward future projects like robotaxis.
Not all news was grim. Meta Platforms surged 10.4% after beating profit forecasts, and IBM climbed 5.1% on robust results. Southwest Airlines soared 18.7% after outlining an optimistic long-term earnings outlook.
Commodity markets joined the retreat. Oil prices fell more than $1 per barrel, pulling back after a recent spike fueled by U.S.-Iran tensions. Gold slipped 0.2% to $5,342 an ounce, and silver tumbled 3.5% to $110.41, cooling off from their recent blistering rallies. The precious metals had soared as havens amid concerns over political instability, trade tensions, and stretched equity valuations.
The volatility has left some investors exasperated. Anya Petrova, an independent trader based in Sydney, offered a sharper take: "This is classic speculative froth coming off. Markets have been drunk on AI hype and cheap money. Microsoft's crash is the hangover hitting—and it's going to be a painful one for anyone who bought at the peak."
In contrast, Michael Roberts, a veteran economist at a Hong Kong-based wealth advisory, urged perspective. "A single-day correction, even a sharp one, doesn't derail a long-term trend. Fundamentals for big tech remain strong, but we are entering a phase where execution and actual earnings from AI will be scrutinized mercilessly."
As the trading week closed, the focus shifted to whether the sell-off represents a healthy consolidation or the start of a deeper correction, especially for technology shares that have led global markets higher.