This content was published on
July 16, 2026 - 07:57
6 minutes
(Bloomberg) — Semiconductor stocks fell across Asia, dragging regional equities lower, as investors became more skeptical that the artificial intelligence-driven rally can withstand lofty valuations. Oil declined.South Korea’s Kospi Index — a bellwether for AI investments — slumped 6% ahead of Friday’s market holiday, with SK Hynix Inc. and Samsung Electronics Co. leading the losses. A 3% drop in Japan’s Nikkei 225 Stock Average deepened the regional retreat, dragging MSCI’s Asia Pacific equities gauge down 1.2%.Sentiment stabilized as the trading day progressed, with Taiwan Semiconductor Manufacturing Co. beating earnings estimates in the latest sign of sustained AI demand. Equity-index futures for Europe and the US also indicated modest gains.Elsewhere, Brent erased an earlier advance triggered by fresh US airstrikes on Iran, to fall 0.5% to $84.50. A measure of the pound’s strength rose to its highest level in a year on Wednesday following reports that incoming UK Prime Minister Andy Burnham will name Shabana Mahmood as his Chancellor of the Exchequer.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 0.8% to about $4,030 an ounce, snapping two days of gains.Semiconductors remained firmly in focus, with a gauge of Asian chipmakers tumbling 3.2% 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.Elsewhere, softer US inflation data this week eased concerns over near-term Fed rate hikes, but the escalating conflict in the Middle East has revived fears over energy supplies.“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.Corporate News:ABB Ltd. agreed to buy British industrial components company Rotork Plc for an enterprise value of around $5.5 billion to expand its automation business. Syngenta Group’s planned $5 billion Hong Kong initial public offering is facing delays as the seed and pesticide company waits for better conditions in the agriculture sector, according to people familiar with the matter. Nordea Bank reported second-quarter net fee and commission income that topped analyst estimates, as assets under management hit a record high. Uber Technologies launched a voluntary public takeover offer for Delivery Hero at €41.50 per share in cash. Some of the main moves in markets:StocksS&P 500 futures were little changed as of 6:54 a.m. London time Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index fell 1.3% The MSCI Emerging Markets Index fell 1% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1464 The Japanese yen was little changed at 162.13 per dollar The offshore yuan was little changed at 6.7680 per dollar The British pound was little changed at $1.3532 CryptocurrenciesBitcoin fell 0.2% to $64,839.44 Ether was little changed at $1,923.27 BondsThe yield on 10-year Treasuries advanced one basis point to 4.56% Germany’s 10-year yield was little changed at 3.12% Britain’s 10-year yield declined four basis points to 4.94% CommoditiesBrent crude fell 0.4% to $84.64 a barrel Spot gold fell 0.8% to $4,026.50 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Cameron Crise and Stephen Kirkland.©2026 Bloomberg L.P.
