Asia Equities Mostly Decline on AI Concerns

By Megan Cheah

Asia-Pacific equities mostly declined, as a pullback in U.S. chip stocks fueled concerns about the longevity of artificial-intelligence enthusiasm and weighed on chip-heavy South Korea.

The highly volatile South Korean equities market, home to chip makers SK Hynix and Samsung Electronics, erased much of its Wednesday gains and slipped into a bear market, which refers to a decline of at least 20% from a recent high.

The sharp drop prompted Korea Exchange to briefly suspend trading in the benchmark Kospi's constituent stocks early Thursday.

The index was recently 6.4% lower, while SK Hynix and Samsung Electronics--which collectively account for around half of the capitalization-weighted index--declined 11% and 8.2%, respectively. SK Hynix's American depository receipts closed 9.0% lower overnight amid weakness in U.S. semiconductor stocks such as Nasdaq-listed Micron Technology and Intel.

Japan's Nikkei Stock Average declined 2.8%, while Australia's S&P/ASX 200 edged 0.3% lower. China's Shanghai Composite dropped 0.6%, while Taiwan's Taiex edged 0.1% lower. Hong Kong's Hang Seng Index bucked the regional trend to rise 1.8%.

Both the Nikkei and the Nasdaq Composite have "ridden the wave of AI enthusiasm, but now that trade seems buffeted by uncertainty and at risk of more declines," said Chris Beauchamp, chief market analyst at IG, in an email.

Asian currencies were mixed against the U.S. dollar.

South Korea's central bank raised its rates for the first time since 2023 in a widely expected move, while Japan Finance Minister Satsuki Katayama reiterated that the government could "take appropriate action in the foreign-exchange market at any time as needed" to boost the weak yen. Reactions to both appeared minimal, with the dollar flat against both the won and the yen.

While the dollar could be weighed by the U.S.'s softer-than-expected producer price index print for June, Commonwealth Bank of Australia's Carol Kong flagged that the prospect of the U.S. and Iran returning to a "hot war" poses downside risks to the Australian dollar against its U.S. counterpart. The Australian dollar was recently 0.2% lower at US$0.6994.

Meanwhile, oil extended gains as tensions remained high in the Middle East.

President Trump is considering expanding U.S. military operations in Iran, U.S. officials said. Options include stepping up airstrikes and sending ground forces to seize Iranian islands near the Strait of Hormuz, The Wall Street Journal reported.

The continuing strikes in Iran raised concerns of further disruption to oil supplies, said ANZ Research analysts in a note. The conflict is heavily centered around the Strait of Hormuz, a waterway through which one-fifth of the world's oil is typically transported.

Front-month West Texas Intermediate crude oil futures gained 0.6% to US$80.07 a barrel, while front-month Brent added 0.4% to US$85.26 a barrel.

Write to Megan Cheah at megan.cheah@wsj.com

(END) Dow Jones Newswires

July 15, 2026 23:23 ET (03:23 GMT)