Stocks Slide With Futures as Chip Selloff Deepens: Markets Wrap

(Bloomberg) — Stocks fell for a second day as investors rotated out of technology shares, deepening a selloff in chipmakers after the sector’s blistering rally earlier this year. Equity-index futures pointed to further losses.

MSCI’s Asia Pacific equities gauge slid 2.7%, heading for its lowest close in two months, while Japan’s Nikkei 225 Stock Average slumped 5.2%, set for its worst day since March. Chip bellwethers tumbled with Taiwan Semiconductor Manufacturing Co. set for its biggest one-day decline since April 2025, and Japan’s Kioxia Holdings Corp. sank as much as 16%.

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 dropped 1.4%, while European stocks were set to decline more than 1% at the open.

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 at about $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 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.

“Capex guidance comes into focus again as investors get increasingly skeptical on whether growth can be achieved sustainably while maintaining a healthy balance sheet,” said Fabien Yip, a market analyst at IG International. “We expect the market to continue to experience volatility during the earning season, but this is unlikely to be an end to the AI story.”

In other corners of the market, Government bonds edged lower in Australia and Japan. Treasuries were little changed, with the yield on the benchmark 10-year holding at 4.55%.

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.

The dollar was a touch stronger against most of its major peers. That was due to a combination of the selloff in technology stocks, rising energy prices, and higher US real yields, said Chidu Narayanan, chief Asia Pacific strategist at Wells Fargo in Singapore.

“US data is not ‘hot,’ but it is strong enough to support the dollar even as other factors are leaning towards marginal dollar strength,” he said.

What Bloomberg’s Strategists Say…

The speed and depth of declines across Asia’s main stock indexes is starting to look like panic selling as investors try to lock in what they can off this year’s remaining gains. The calendar impact is helping to worsen the mood as, with July half way complete, the losses for traders are mounting.

— Mark Cranfield, MLIV Asia. For full analysis, click here.

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.

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

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.

“Without a doubt, this is a month of extraordinary volatility in the chipmaker space,” George Boubouras, head of research at hedge fund K2 Asset Management, said on Bloomberg TV. “We haven’t been overweight the chip space year-to-date. And therefore obviously not overweight in this current volatility. But this rotation going through is quite extraordinary.”

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.8% as of 1:57 p.m. Tokyo time Nikkei 225 futures (OSE) fell 5.3% Japan’s Topix fell 3.6% Australia’s S&P/ASX 200 fell 0.8% Hong Kong’s Hang Seng fell 2% The Shanghai Composite fell 1.6% Euro Stoxx 50 futures fell 1.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1436 The Japanese yen was little changed at 162.41 per dollar The offshore yuan was little changed at 6.7769 per dollar Cryptocurrencies

Bitcoin fell 1% to $63,443.95 Ether fell 1.1% to $1,849.22 Bonds

The yield on 10-year Treasuries was little changed at 4.55% Japan’s 10-year yield was little changed at 2.705% Australia’s 10-year yield advanced one basis point to 4.91% Commodities

West Texas Intermediate crude rose 1.2% to $79.86 a barrel Spot gold rose 0.1% to $3,981.90 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Momoka Yokoyama, Matthew Burgess and Abhishek Vishnoi.

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