South Korea’s KOSPI fell sharply on Thursday and Japan’s Nikkei 225 reversed an early advance as renewed selling in artificial intelligence-linked shares overshadowed strong US technology earnings.
The KOSPI slid almost 2% towards 5,635, surrendering part of Wednesday’s 3.29% rally. The Nikkei dropped around 1.6% to below 64,000 after briefly trading higher. Both were intraday readings.
The retreat came as the Bank of Korea left interest rates at 3%, while Brent crude climbed back above $110 a barrel. Investors are questioning whether strong chip demand can justify AI investment costs.
Korea’s rate pause offers little comfort after a one-day rebound
Wednesday’s rally had taken the KOSPI to 5,735.66, powered by advances of 5.67% in Samsung Electronics and 5.81% in SK Hynix.
Foreign investors bought a net 660 billion won of shares, interrupting October’s outflows.
That momentum faded on Thursday. Samsung lost more than 3% and SK Hynix nearly 4% in an early snapshot. LG Energy Solution, Samsung SDI and Hyundai Motor also declined, broadening the retreat.
The Bank of Korea held its benchmark rate at 3%, following increases in July and August.
The expected pause came with upgraded growth forecasts and the possibility of further tightening. Inflation was 2.9% in September, above its 2% target.
Daishin Securities analyst Lee Kyoung-min, in an assessment published by Korea JoongAng Daily this week, argued that concerns about AI credit risk and profitability were limiting the durability of chip-share rebounds.
Nikkei’s chip retreat collides with Japan’s energy vulnerability
In Tokyo, Tokyo Electron lost 3.7%, Fujikura 2.8% and Ibiden 2.6% in an early snapshot. Kioxia and SoftBank also weakened as Wednesday’s recovery faded.
The retreat contrasted with stronger US earnings. Meta beat revenue expectations and Super Micro Computer raised its outlook, but investors remain uncertain about returns on debt-financed AI investment.
Commerzbank analysts acknowledged that solid AI earnings had supported sentiment, while noting that renewed Middle East tensions were restraining risk appetite.
Brent rose around 1.1% to $110.03 as security threats around Gulf energy infrastructure returned to focus.
Japan’s fuel-import dependence magnifies that shock. A yen near 158 per dollar compounds the cost, while the Bank of Japan meets on October 30.
Wider Asian markets show the recovery is losing breadth
The MSCI Asia-Pacific benchmark outside Japan slipped 0.2% as Wednesday’s optimism faded.
Hong Kong’s Hang Seng fell about 2.1% amid pressure on technology and battery shares, while the Shanghai Composite lost roughly 0.9% and the CSI 300 declined about 1.3%.
Taiwan’s TAIEX edged 0.2% lower after an early gain, and Australia’s ASX 200 was down about 0.6%. Japan’s broader Topix had initially risen, highlighting differences between benchmarks in earlier trade.
KCM Trade analyst Tim Waterer, in commentary carried by Bloomberg, said investors were struggling to find a satisfactory level of AI capital spending: increasing budgets raises financing worries, while cuts can suggest weaker growth expectations.
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