Investing.com — Most Asian stocks fell on Friday, with tech-heavy indexes dropping sharply as profit-taking hurt technology shares despite a weak U.S. inflation reading that boosted optimism for interest rate cuts.
Regional stocks largely tracked Wall Street’s overnight decline, falling nearly 2 percent as profit-taking hit big technology stocks, especially chipmakers and artificial intelligence stocks.
US stock futures were steady in Asian markets as attention shifted to the start of second-quarter earnings season, with a host of major banks due to report results on Friday.
The stock market decline came after weaker-than-expected U.S. economic data for June led traders to bet the Federal Reserve will start cutting interest rates in September.
Asian tech stocks hit by profit-taking, Nikkei falls 2%
Technology-heavy indexes, which have outperformed their regional peers in recent weeks, posted the biggest declines on Friday, as profit-taking in the sector surged this year after hype around artificial intelligence sparked a surge in stock valuations.
Traders are likely shifting their investments to other cyclical sectors that are expected to benefit from lower interest rates.
Japanese stocks, emblematic of the trend, fell 2.2% from a record high hit on Thursday. The Nikkei, which has far fewer tech stocks than the Nikkei, fell 0.9%. Renesas Electronics Corporation (TYO:), Advantest Corporation (TYO:) And Tokyo Electron Limited (TYO:) fell 4-7%, while tech investment firm SoftBank Group (TYO:) dropped 3.2%.
South Korea, mainly memory chip makers, fell 1.4% SK hynix Co., Ltd. (KS:) I’m losing more than 3%.
Shares of TSMC (TW:) (NYSE:), the world’s largest contract chipmaker and a driving force behind the recent tech stock rally, have fallen more than 4% from their all-time highs.
Hong Kong booms with bargain sales, ASX hits record high
But China’s leading tech stocks largely avoided weakness among their global peers as the sector’s relatively low valuations sparked a lot of bargain hunting.
A major Chinese tech company listed in Hong Kong Baidu Nasdaq:), Alibaba Group Holding Ltd. (HK:) and Tencent Holdings Ltd. (HK:) each rose more than 2% to help drive the 2% gain.The index also fell further from a two-month low hit earlier this week.
China’s markets fell less than other markets, with its stock index and share price index trading flat on Friday.
Australian shares outperformed their Asian peers, rising 0.9 percent to a record 7,969.10 points, boosted by inflows into cyclical sectors such as mining and industrials, which have a relatively low weighting in technology stocks.
These sectors are expected to benefit from the low interest rate environment, which led to broad gains in Asia.
Indian stock index futures are pointing to a flat open, with gains in industrial and consumer stocks set to offset losses in tech stocks. Both the Nifty and Indian stocks hit record highs earlier this week amid continued optimism about the Indian economy.
