Asian Markets Crashed: Technology Stocks Decline

Asian stock markets based in Bangkok experienced a drastic collapse on Tuesday following a decline in shares related to Nvidia and other artificial intelligence companies. The Tokyo and Seoul exchanges fell by more than 3%, alarming investors.

U.S. stock futures also fell; futures for the S&P 500 decreased by 0.6%, while futures for the Dow Jones Industrial Average dropped by 0.4%. Nvidia, at the center of the AI frenzy, will announce its earnings report on Wednesday. However, investors are concerned that the share prices of such companies have risen too much.

Another negative impact on the markets was the delay of the U.S. employment data, which is coming out on Thursday due to the prolonged government shutdown. Additionally, the yield on Japanese government bonds rose to 3.31%, reflecting increasing risks in the markets. Prime Minister Sanae Takaichi plans to increase government spending and extend the timeline for reducing Japan's large public debt.

The yen rose against the U.S. dollar, exceeding 155 and nearing its highest level since February. On Monday, the yen fell to its lowest level against the Euro since 1999. The Nikkei 225 in the Tokyo stock exchange dropped by 3% to 48,835.20 points during the lunchtime hours. Selling in technology stocks was prominent; Tokyo Electron decreased by 5.4%, and Advantest lost 4.6%.

In the Seoul stock market, the Kospi declined by 3.1%, falling to 3,960.82 points. Samsung Electronics dropped by 2.9%, while chipmaker SK Hynix lost 5.7%. The Taiwan stock market saw the Taiex fall by 2.3%, with the world's largest chip maker TSMC decreasing by 2.4%.

The Hong Kong stock exchange fell by 1.5%, dropping to 25,997.20 points, while the Shanghai composite index decreased by 0.6%, landing at 3,949.83 points. In Australia, the S&P/ASX 200 fell by 2.1% to 8,452.50 points.

On Monday, the S&P 500 decreased by 0.9%, falling to 6,672.41 points, moving further away from its historical peak. The Dow Index dropped by 1.2% to 46,590.24 points, and the Nasdaq composite index declined by 0.8% to 22,708.07 points. Nvidia saw a drop of 1.8%, despite rising more than 40% this year. Other AI winners, such as Super Micro Computer, also lost 6.4%.

Other high-flying market winners also saw declines; Bitcoin continued its downward trend, dragging Coinbase Global down by 7.1% and Robinhood Markets by 5.3%. In early trading, Bitcoin fell by 2% to $90,110.

Many critics warn that the U.S. stock market may be ready to decline given how much prices have risen since April.

However, Alphabet gained 3.1% after Berkshire Hathaway bought $4.34 billion in shares of Google’s parent company. Berkshire Hathaway, led by the famous investor Warren Buffett, generally aims to buy stocks only when they reach good values.

Another potential disappointment for the market may be the decisions the Federal Reserve makes regarding interest rates. The market was expecting the Federal Reserve to continue cutting rates to combat the weakness in the labor market.

The biggest drawback of lower interest rates could be that they boost inflation, which keeps the Federal Reserve above its 2% target. Federal Reserve officials note that the U.S. government's shutdown has delayed employment market updates and other economic data. With less information and uncertainty, some Federal Reserve officials suggested that it might be more appropriate to wait until December for more clarity.

In the event of a strong employment report on Thursday, the Federal Reserve may likely hold off on rate cuts. Weak data could raise concerns about the economy.

On Tuesday morning, U.S. benchmark crude oil fell by 42 cents to $59.49 per barrel, while the international benchmark Brent oil dropped by 43 cents to $63.77.

The dollar traded at 155.08 against the yen, while the Euro started trading at $1.1600.