Asian equities slump as tech sell-off weighs on European trade sentiment
Key Takeaways
- •South Korea’s KOSPI fell about 10%, making it the region’s steepest decliner in a broad Asian equity selloff.
- •The index is roughly 35% below this year’s highs, but still more than 40% higher year to date.
- •Recent losses pushed the KOSPI below its 100-day moving average, and the 200-day moving average is now the next key technical level.
- •Other regional markets also fell, including the Nikkei, TAIEX, Shanghai Composite and CSI 300.
- •S&P 500 futures were down 0.2% and Nasdaq futures were down 0.7% ahead of upcoming big tech earnings.
It is a very weak session for Asian equities, with technology shares, especially chipmakers and semiconductor stocks, coming under heavy pressure. South Korea’s benchmark KOSPI index is the biggest decliner, falling by about 10% on the day. The move marks a sharp continuation of the slide that began in mid-June, leaving the index down roughly 35% from this year’s highs.
Even after today’s drop, the KOSPI is only back to its lowest level since mid-April. At the same time, the index remains more than 40% higher year-to-date, underscoring the scale of the rally seen mostly since March. That contrast helps explain why the current move is being watched closely: a market that had climbed quickly is now showing how fast sentiment can unwind when investors rotate away from the most crowded areas.
From a technical perspective, the latest decline is notable. The past two weeks of selling have now pushed the index below its 100-day moving average, which weakens the more bullish momentum picture. Attention is now turning to the 200-day moving average, which may be tested next. A break below that level would shift the momentum bias toward a more bearish setup, making it an important threshold for dip buyers to defend.
The weakness is not limited to South Korea. Across the region, the Nikkei is down nearly 4%, while the TAIEX is lower by a little over 4%. In China, the Shanghai Composite is down around 1%, and the CSI 300 is off by a little more than 2%.
The broader tone has been unsettled by continued AI-related worries, setting up a nervous start to European trading and a cautious lead-in to the Wall Street open later in the day. S&P 500 futures are down 0.2%, while Nasdaq futures are lower by 0.7% after further selling pressure yesterday weighed on U.S. technology shares.
Big tech earnings are still due over the coming days, and those results are likely to be a key test for U.S. stocks given the current backdrop. With technology accounting for a large share of recent market gains, investors are likely to focus on whether companies keep backing up spending plans with earnings and guidance. Month-end flows and potential U.S.-Iran headlines add further complications to an already fragile market mood.