Investing.com — Asian stocks fell on Thursday, led by a decline in the technology sector after market darling Nvidia Corp.'s disappointing earnings outlook, but hopes of lower interest rates capped the overall decline.
The technology sector's declines were also relatively muted, given that NVIDIA Corporation (NASDAQ:) reported better-than-expected quarterly earnings, suggesting analysts remain bullish on the company.
Regional markets received a weak lead from Wall Street, while U.S. stock index futures fell in Asia as worries over Nvidia rocked the technology sector, while stock and stock indexes continued to slide from record highs.
Asian tech companies, chipmakers follow Nvidia in decline
Technology-heavy Asian bourses were the worst fallers on the day, with South Korea, Hong Kong and other stock indexes each down about 0.8%.
A drop in tech stocks also dragged Japanese stocks down 0.2%, while U.S. stocks fell 0.3%.
The declines in tech stocks were concentrated mainly among chip makers, particularly those that do direct business with Nvidia, whose shares fell as much as 8.5% in after-market trading.
Taiwan's TSMC (TW:) (NYSE:) fell 2%, while Hon Hai Precision Industry Co. (TW:), also known as Foxconn, fell 1.6%.
SK Hynix (KS:), a memory chip maker and key supplier to Nvidia, fell 6%, while rival Samsung (KS:) fell 3%.
In Japan, semiconductor testing equipment maker Advantest fell 0.5%, while Tokyo Electron fell 1.1%.
Shares in China's largest chipmaker and Nvidia's local rival, Semiconductor Manufacturing International Ltd. (HK:), fell slightly.
Nvidia's earnings report also sent technology stocks generally lower on concerns that the so-called “AI deal” that has powered the tech industry over the past year is losing steam.
The decline in tech stocks came amid a broader shift out of the sector and into more economically sensitive names as investors bet interest rates will be lower in the coming months.
Losses across Asia relatively contained, focus on rate cuts
With the exception of technology stocks, losses across Asian markets were limited by investments in sectors benefiting from low interest rates.
Australia's index was down 0.4 percent, boosted by a low weighting in technology stocks. It also ignored a better-than-expected consumer price index released on Wednesday.
Chinese stocks and indexes fell 0.1% and 0.5% respectively, languishing at six-month lows as sentiment towards the country showed little sign of improving.
Indian stock index futures opened slightly positive as the index was seen advancing further above the closely watched 25,000 level, with the Nifty and Nifty within striking distance of hitting new highs.
Recent dovish comments from the Federal Reserve have bolstered expectations of a rate cut in September, which bodes well for stocks. The focus this week will be on further economic data and U.S. data, including the Fed's preferred inflation gauge.
