Asian stock markets experienced a sharp sell-off on the last trading day of the week, mirroring negative cues from US equity markets where technology stocks fell significantly on Thursday. The Nikkei index dropped over 4%, trading near 64,100, while the Shanghai index plunged 1.55% to around 3,820, and the Hang Seng index plummeted 1.64% to approximately 24,600. South Korean markets remained closed due to Constitution Day, limiting regional trading activity [1].
The sell-off was triggered by losses in US chip stocks following Alphabet Inc.'s delay in releasing its Gemini 3.5 Pro AI model, raising concerns about capital spending in the Artificial Intelligence sector. Despite these concerns, chip manufacturers reported strong second-quarter earnings and increased their revenue guidance for upcoming quarters. Notably, Taiwan Semiconductor Manufacturing Co. (TSMC) raised its full-year 2026 revenue growth guidance to slightly above 40%, up from more than 30%, according to Yahoo Finance [1].
Additionally, weak revenue guidance from Netflix contributed to the negative sentiment in US stocks. Netflix projected $12.86 billion in revenue for the third quarter of this year, only slightly higher than the $12.6 billion reported in the second quarter, citing concerns about subscriber growth as the platform matures [1].
Geopolitical tensions, particularly continued military aggression between the US and Iran, further impacted Asian equity markets. Elevated oil prices resulting from these tensions are increasing the burden of higher foreign outflows on Asian economies, which rely heavily on crude imports to meet their energy needs [1].
CONCLUSION
Asian stock markets suffered significant declines, driven by US tech sector weakness, disappointing guidance from Netflix, and ongoing geopolitical tensions. Despite strong earnings and optimistic guidance from chipmakers like TSMC, broader market sentiment remains negative. Elevated oil prices and concerns over capital spending in AI continue to weigh on investor confidence across the region.