Technology shares lost momentum in Asia on Thursday after a disappointing earnings report from Alphabet and a pullback in South Korea’s chipmakers cooled a rally that had carried global markets higher this week.
Wall Street edges up on the Fed
US stocks ended Wednesday modestly higher, helped by the Federal Reserve’s decision to hold interest rates at 3.75% to 4.00%. The S&P 500 gained 0.28% to 7,743.98. The Dow Jones Industrial Average added 0.19% to 52,475.10, and the Nasdaq Composite rose 0.27% to 26,549.85. Chip stocks finished higher before Alphabet reported.
The Fed’s decision was widely expected, but two officials voted for a rate rise. Investors read the hold as a hawkish one. The ten-year Treasury yield rose to around 5.04%.
Alphabet shakes up the evening
After the close, Alphabet shares fell about 10% in extended trading, from a regular-session close of $321.89. The company’s revenue and earnings per share missed analyst forecasts, and it reported negative free cash flow of about $9.1 billion as capital spending more than doubled. Its cloud division nonetheless grew 103%. Microsoft rose roughly 3% to 4% after posting a stronger beat.
The market reaction showed in futures. Nasdaq-100 futures slid as much as 1.5% in Asian hours, while S&P 500 futures also pointed lower.
Asia: a reversal in Korea
South Korea’s market gave back some of its recent gains. The Kospi fell 2.2% to 5,880.25, after surging nearly 7% on Wednesday. That rally was driven by SK Hynix, which jumped almost 11% after reporting record quarterly profit and announcing a plan to return about 100 trillion won to shareholders. The memory chipmaker rose a further 1.6% on Thursday.
Samsung Electronics, the market’s other heavyweight, dropped 5.4%. The company had announced strong quarterly results, but some investors were unhappy with its shareholder-return plans, according to The Associated Press. Other reports pointed to a shortfall in its chip profit. The small-cap Kosdaq index lost more than 2%.
Elsewhere in the region:
Japan’s Nikkei 225 edged up 0.2% to 64,073.17, while the broader Topix slipped 0.3%. SoftBank Group, a major investor in the AI sector, fell 0.5%.
Taiwan’s Taiex, which is heavily weighted toward chipmakers, lost 1.9%.
Hong Kong’s Hang Seng was roughly flat at 23,101.86, and the Shanghai Composite declined 0.9% to 3,647.12.
Australia’s S&P/ASX 200 gained 0.5% to 8,888.50.
A market looking for a reason
The week’s moves illustrate how sensitive technology stocks have become to every earnings report. Chip shares rallied for three straight sessions earlier this week, with the Philadelphia semiconductor index up 3.6% on Tuesday alone. That left them vulnerable to any sign that spending on computing infrastructure was outrunning returns.
Breadth has been a concern throughout. On Tuesday, most stocks in the S&P 500 fell even as the index rose, a sign that a handful of large technology names were doing the work. Alphabet’s drop tests how much support exists elsewhere.
Analysts said the volatility also reflects uncertainty about the Fed. Traders see a reasonable chance that the central bank raises rates again by December, and the oil market remains a wild card. Brent crude has traded above $114 a barrel on supply fears.
What to watch today
The personal consumption expenditures price index, the Fed’s preferred inflation measure, is due out today. The European Central Bank announces its latest policy decision later, and the Bank of Japan is expected to hold on Friday.
On the earnings front, Amazon reports after the US close, along with Intel. Investors want to see whether Amazon’s cloud unit can match the growth shown by Microsoft and Google, and what the company says about its spending plans.
Market data is for information only and is not investment advice.
