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July 16, 2026 - 05:53
6 minutes
(Bloomberg) — Semiconductor stocks tumbled across Asia, dragging regional equities lower, as investors became more skeptical that the artificial intelligence-driven rally can withstand lofty valuations. Oil slipped.South Korea’s Kospi index — a bellwether for AI investments — slumped as much as 7.6%, with SK Hynix Inc. and Samsung Electronics Co. leading losses ahead of a holiday in Seoul Friday. A 2.5% drop in Japan’s Nikkei 225 Stock Average compounded the selloff, dragging MSCI’s Asia Pacific equities gauge down 1.2% and ending a two-day winning streak.Investors remained cautious after The Information reported that ASML Holding NV — a linchpin of the semiconductor supply chain — plans to raise prices. Attention now turns to Taiwan Semiconductor Manufacturing Co.’s earnings later Thursday for a fresh read on the AI buildout.Sentiment steadied as US equity-index futures edged 0.1% higher and contracts indicated a modest gain for European shares. Brent erased an earlier advance triggered by fresh US airstrikes on Iran, falling 0.4% to $84.64 a barrel after a three-day rally.The durability of the AI rally remains in focus as the earnings season tests lofty chip-sector valuations after a blistering advance earlier this year. While bouts of profit-taking are typical after such gains — the Kospi has surged more than 60% this year — investors are watching closely for signs of slowing demand for AI infrastructure or weaker-than-expected guidance.“I’ve long been concerned about this sort of speculative frenzy in the retail sector in South Korea,” John Woods, Asia CIO and head of investment solutions at Lombard Odier, said on Bloomberg Television. “I do get concerned when I see excess leverage in any market. It tends not to end well as a general rule.”In other corners of the market, Australian and New Zealand government bonds advanced after softer-than-expected US producer price inflation for June drove a Treasuries rally on Wednesday and prompted traders to further scale back expectations for Federal Reserve interest-rate increases.A Bloomberg gauge of the dollar was little changed after two days of losses that were fueled by bets the Fed won’t be under pressure to raise interest rates. Gold fell almost 0.5% to about $4,035 an ounce, snapping two days of gains.Semiconductors remained firmly in focus, with a gauge of Asian chipmakers tumbling 3.1% and heading for its lowest close in a month.“It is quite natural that after a 100% rally, you tend to see some sort of a digestion in the market and profit booking, and that is what we are seeing in the Korean market right now,” Suresh Tantia, Asia Pacific strategist and chief investment officer at UBS Global Wealth Management in Singapore, said on Bloomberg Television. “We are still bullish on the Korean equity market and I think this is only a mid-cycle digestion.”What Bloomberg Strategists say…“South Korean equities were to the fore earlier this year as they led robust gains for global stocks (outside of a month-long wobble for both at the start of the Iran war). Now that the Kospi is in a cascading slide, the concern is that the benchmark will now lead the way down for global peers.”— Garfield Reynolds, MLIV Asia Team Leader. For full analysis, click here.Earlier, the head of Korea’s Financial Services Commission said South Korea will soon announce measures regarding the leveraged exchange-traded funds tied to shares of Samsung Electronics and SK Hynix that have fueled a surge in market volatility.The leveraged ETFs launched just two months ago multiply daily moves in the underlying stocks by two times. They’ve been blamed by many market participants for intensifying swings due to the daily rebalancing flows required to maintain their promised return ratios.In geopolitical news, the US-Iran interim peace deal signed around a month ago has all but collapsed over the past week as the two sides feud over control of the vital strait, through which Saudi Arabia, Qatar, the United Arab Emirates and others send most of their energy exports.The latest attacks come as US President Donald Trump pledged to intensify the bombardment until Tehran stops attacking ships in the Strait of Hormuz and agrees to open the waterway.While inflation reports this week eased concerns over near-term Fed rate hikes, the escalating conflict in the Persian Gulf has revived fears over energy supplies from the region.“Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn’t open soon,” said David Russell at TradeStation.Some of the main moves in markets:StocksS&P 500 futures rose 0.1% as of 12:50 p.m. Tokyo time Japan’s Topix fell 0.9% Australia’s S&P/ASX 200 fell 0.2% Hong Kong’s Hang Seng rose 1.8% The Shanghai Composite fell 0.8% Euro Stoxx 50 futures rose 0.2% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1467 The Japanese yen was little changed at 162.10 per dollar The offshore yuan was little changed at 6.7667 per dollar CryptocurrenciesBitcoin fell 0.6% to $64,537.54 Ether fell 0.3% to $1,917.05 BondsThe yield on 10-year Treasuries was little changed at 4.55% Japan’s 10-year yield advanced one basis point to 2.695% Australia’s 10-year yield declined two basis points to 4.88% CommoditiesWest Texas Intermediate crude fell 0.3% to $79.40 a barrel Spot gold fell 0.6% to $4,036.43 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Cameron Crise and Stephen Kirkland.©2026 Bloomberg L.P.
