Asian markets experienced continued declines on Friday as the tech-driven selloff intensified, with South Korea's KOSPI showing the damage of a Western market in flux, dropping from 8,930.31 on Thursday's close to around 8,600 in early trading. According to The Economic Times, stocks in Asia slipped in early trading as heavyweight chip shares gave back some of the gains from Thursday's blistering rally. The decline follows Apple's announcement on June 25th that it raised prices on MacBooks and iPads by up to $300, citing an "unprecedented" surge in memory and storage chip costs driven by AI data center demand, with Apple shares closing more than 6% lower. Microsoft followed hours later, announcing Xbox console price increases of $100 to $150 per model, effective August 1, with Microsoft stock falling 3.5%. US futures remained steady following the choppy Wall Street session, with investors closely watching the sustainability of high tech valuations amid concerns over AI spending and potential interest rate adjustments by the Federal Reserve.
The back-to-back announcements from Apple and Microsoft confirmed what investors had feared: the AI chip shortage is no longer an industry-level problem. It now hits consumer prices directly. According to The Economic Times, Apple's price hikes on MacBooks and iPads by up to $300 and Microsoft's Xbox console price increases of $100 to $150 per model represent the first clear evidence that soaring AI chip costs are forcing Big Tech's hand. SoftBank dropped more than 12% on Friday, with SoftBank Group's chip design subsidiary Arm Holdings falling 3.2% overnight, underperforming even as broader AI stocks recovered. SoftBank faces additional headwinds beyond the regional selloff, with analysts at Ortus Advisors noting that investor enthusiasm may be capped by reports that OpenAI could push back its IPO to 2027, as the company struggles to attract demand at a $1 trillion valuation, with SoftBank ranking among OpenAI's most prominent backers.
South Korea's Kospi stock index plunged nearly 10% on Tuesday, triggering a temporary trading halt as the index closed at 8,203.84, down 910.71 points, or 9.99%. According to Zee News, the Korea Exchange activated market-wide circuit breakers, suspending trading for 20 minutes as authorities sought to contain panic selling. The collapse came after shares of semiconductor giants Samsung Electronics and SK Hynix fell more than 12% each amid reports that SK Hynix may slow the expansion of AI memory-chip production and focus more on conventional DRAM products. On Friday, South Korea's SK Hynix and Samsung fell more than 4%, with SK Square, a technology holding company with heavy semiconductor exposure, declining around 7%. The selling pressure raised concerns over the pace of future AI-related demand and spending.
The IT sector bore the brunt of the selling, declining more than 2% after brokerages Jefferies and Morgan Stanley flagged softer demand trends following a weaker-than-expected outlook from Accenture. According to The Hindu BusinessLine, the selloff was compounded by broader concerns over AI-related valuations in US equities spilling across global markets. Nifty Metal was another major laggard, falling as much as 3%, tracking a drop in global metal prices. PSU banks and media also ended significantly lower, while pharmaceutical and healthcare stocks bucked the trend, attracting defensive buying after reports emerged that the U.S. FDA had approached Indian drug manufacturers through the Indian Drug Manufacturers' Association to address a shortage of ifosfamide injection, a chemotherapy drug used in the treatment of multiple cancers. Vinod Nair, Head of Research at Geojit Investments, said that "most sectoral indices ended in the red, with metals recording the sharpest decline due to falling global prices and demand concerns," adding that "the domestic IT sector also remained under pressure, reflecting the global tech rout and persistent concerns over AI-led disruptions."
The Federal Reserve's more hawkish stance has created significant market implications across asset classes, with Fed fund futures now pointing to two rate hikes this year instead of one, as markets scramble to reprice monetary policy expectations. As reported by Investing.com, elevated yields are weighing on growth stocks, amplifying pressure on tech names that had been the poster children of 2026's rally. The USD index added 0.2%, pushing the USD/JPY within striking distance of levels last seen in 1986. Market analysts suggest this could be a recipe for a bull trap, as traders watch closely for any signs of intervention. Interest-rate swaps linked to future Fed rate decisions showed a drop in wagers on a hike this year, pricing in about 34 basis points of tightening by the December policy meeting versus some 36 basis points at Wednesday's close. The chance of a rate increase next month dwindled to about one-in-three. Meanwhile, the Fed's preferred inflation gauge, the personal consumption expenditures price index, rose 0.4% in May, below economists' median estimate for a 0.5% increase, with the annual rate accelerating to 4.1%, well above the Fed's 2% target. A separate report showed the US economy grew at an annualized 2.1% pace in the first quarter, faster than previously estimated.
