Stocks Drop as Chip Selloff Deepens, Oil Climbs: Markets Wrap

(Bloomberg) — Asian stocks fell alongside US equity-index futures as a selloff in chipmakers deepened on mounting concern that massive artificial-intelligence investments may not justify lofty valuations. Oil climbed.

MSCI’s Asia Pacific equities gauge dropped 1.9%, with Japan’s Nikkei 225 Stock Average losing 4%. Taiwan Semiconductor Manufacturing Co. dropped 3.6% as the chip bellwether’s solid earnings outlook was overshadowed by a higher spending forecast. Kioxia Holdings Corp. sank 13%, halving its market capitalization in just a month.

Netflix Inc. also weighed on sentiment, with shares falling 9% in extended trading after the company forecast a second straight quarter of slowing sales growth. Equity-index futures for the Nasdaq 100 Index retreated almost 1%.

Elsewhere, Brent rebounded from Thursday’s losses as hostilities across the Middle East continued to escalate and shipping traffic slumped in the Strait of Hormuz. The commodity traded just above $85 a barrel and was up 12% for the week, on track for its biggest weekly gain since April and rekindling inflation concerns.

Technology stocks have come under pressure in recent weeks as investors increasingly question whether this year’s blistering AI-driven rally has run too far, too fast. While softer US inflation has eased expectations of an immediate Federal Reserve interest-rate hike and Middle East tensions continue to drive oil prices, the focus remains on AI earnings for evidence that billions of dollars in spending will translate into returns.

“The action in the chip stocks going forward is still the most important issue for the stock market,” said Matt Maley, chief market strategist at Miller Tabak. “They are definitely showing some meaningful cracks, so they’re going to have to see a strong and sustainable rebound soon or it will raise some real warning flags.”

In other corners of the market, Government bonds edged lower in Australia and Japan. Treasuries were also a touch weaker, with the yield on the benchmark 10-year edging up one basis point to 4.56%.

The yen traded around 162.45 per dollar even as Japan’s Finance Minister Satsuki Katayama renewed her warning of possible intervention in the market as the currency continued to hover near its lowest level in four decades.

Gold was on track for its biggest weekly loss since early June as renewed hostilities in the Middle East and rising oil prices fueled speculation the Federal Reserve may keep interest rates higher for longer.

Attention remained firmly on the semiconductor sector as investors questioned whether tech stocks had become too richly valued. Alphabet Inc. sank 4.4% Thursday after Google was said to be months behind schedule in delivering its flagship AI model.

What Bloomberg’s Strategists Say…

The trend is now an enemy for Asian equities, especially those in South Korea, rather than the friend it was when they soared for much of the first half of 2026.

— Garfield Reynolds, MLIV Asia Team Leader. For full analysis, click here.

Traders are grappling with whether massive AI capital spending will translate into returns. The four biggest US AI operators are expected to spend more than $725 billion this year alone.

The Philadelphia Semiconductor Index has dropped about 19% from a June peak. A gauge of Asian semiconductor makers was headed for its biggest weekly decline since early March, with Japanese companies taking a hit on Friday and South Korean markets closed.

“With South Korea closed today, investors may be using the Japanese market to hedge semiconductor-related concerns that cannot be absorbed in Korea,” said Yugo Tsuboi, chief strategist at Daiwa Securities.

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.5% as of 10:50 a.m. Tokyo time Japan’s Topix fell 2.4% Australia’s S&P/ASX 200 fell 0.8% Hong Kong’s Hang Seng fell 0.8% The Shanghai Composite fell 1% Euro Stoxx 50 futures fell 0.7% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1441 The Japanese yen was little changed at 162.45 per dollar The offshore yuan was little changed at 6.7770 per dollar Cryptocurrencies

Bitcoin fell 0.8% to $63,559.22 Ether fell 0.9% to $1,852.77 Bonds

The yield on 10-year Treasuries was little changed at 4.56% Japan’s 10-year yield advanced one basis point to 2.720% Australia’s 10-year yield advanced three basis points to 4.93% Commodities

West Texas Intermediate crude rose 1.1% to $79.80 a barrel Spot gold rose 0.2% to $3,984.96 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Stephen Kirkland and Momoka Yokoyama.

©2026 Bloomberg L.P.