Asian equities came under heavy pressure at the end of the trading week, following a broad decline in US technology shares. The latest sell-off was led by semiconductor names, which extended losses after a sharp retreat on Wall Street triggered renewed concern about the near-term outlook for artificial intelligence-related spending and valuations.
The weakness spread across major regional markets. Japan’s nikkei fell more than 4% to around 64,100, while Shanghai lost 1.55% to about 3,820 and Hong Kong’s Hang Seng declined 1.64% to roughly 24,600. South Korean markets were closed for Constitution Day, limiting one potential source of regional trading activity.
Chipmakers remained under pressure after Alphabet delayed the launch of its Gemini 3.5 Pro AI model, a move that raised questions about the pace of capital investment in artificial intelligence. Even so, industry fundamentals have not deteriorated materially. Several major semiconductor companies have posted strong second-quarter results and raised revenue expectations for the months ahead, suggesting that demand from AI infrastructure remains firm.
Taiwan Semiconductor Manufacturing Co. has been among the most optimistic on the sector’s outlook, lifting its full-year 2026 revenue growth forecast to slightly above 40% from a prior estimate of more than 30%, according to a report from Yahoo Finance. That guidance reinforces the view that AI-related orders are still supporting chip demand, even as sentiment around the sector turns more cautious in the short term.
Weakness in US equities was not confined to technology. netflix also weighed on investor sentiment after issuing softer third-quarter revenue guidance, citing slower subscriber growth as its service matures. The disappointing outlook added to concerns that earnings growth in parts of the US market may be moderating.
Geopolitical tensions also contributed to the risk-off tone in Asia. Ongoing tensions involving the US and Iran have helped keep oil prices elevated. For many Asian economies, which depend heavily on crude imports, higher energy costs can increase inflation pressures and worsen the burden of capital outflows, adding another layer of strain to regional markets.USD/CNH extended its advance for a second straight session and was last seen trading near 6.7760 during Asian hours on Friday. The pair has been supported by renewed demand for the US Dollar as investors sought safety amid worsening geopolitical risks in the Middle East.
Tensions intensified after reports that Iran has told Houthi forces to be prepared to block the Red Sea oil route if the US carries out strikes on Iranian infrastructure. Any disruption to this corridor would raise concerns about global energy supplies and broader market stability. Additional reports of explosions in several Iranian cities, together with reported blasts heard in parts of Kuwait and Iraq, added to the sense of alarm across financial markets.
The latest developments came after earlier warnings from US President Donald Trump that the US could target Iranian bridges and power plants next week if Tehran does not return to negotiations. The prospect of further escalation has reinforced the appeal of the Dollar as a haven asset, providing near-term support for USD/CNH.
On the China side, economists and a government adviser said growth could be steadied this year if Beijing accelerates national infrastructure projects that have already been approved and funded. That approach would allow policymakers to support activity without resorting to a large new stimulus package.
The strategy is also intended to offset a sharper-than-expected slowdown in investment, which has weighed on growth in recent data. At the same time, it would help authorities preserve tighter control over local government spending.
