By Gregor Stuart Hunter
SINGAPORE (Reuters) -Asian stocks dived on Wednesday and market volatility surged to levels not seen since April after an overnight tech-led selloff on Wall Street heightened concerns over stretched valuations.
Sellers were particularly harsh on both the Japanese and South Korean markets with Tokyo’s Nikkei tumbling 4.6% and down almost 7% from a record high reached on Tuesday. South Korean shares plunged as much as 6.2%, before recovering slightly.
“It’s probably just time to take pause on the equity market rally we’ve had. It’s been all one-way for a while,” said Jason Wong, senior market strategist at BNZ in Wellington.
Around the region MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.2%. The losses over two sessions exceeded 2.3% and are the heaviest since U.S. President Donald Trump’s Liberation Day tariff announcement roiled markets in early April.
U.S. e-mini futures were down 0.3% in Asia after a 1.2% drop for the S&P 500 overnight. Nasdaq futures fell 0.4% and European futures were down 0.9%.
In Japan, shares in SoftBank Group dived more than 10% as one of the world’s biggest tech sector investors tracked a 2% drop in the Nasdaq overnight. A slew of other chip and cabling companies also took a beating with 10% drops.
“It’s a sea of red across broad markets,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
RECORD RALLY FACES TEST
Stocks are retreating from record highs struck despite sticky inflation, elevated interest rates, a drawn-out shutdown of the U.S. government and tariff-driven trade uncertainty.
On Tuesday CEOs of Wall Street heavyweights Morgan Stanley and Goldman Sachs questioned whether sky-high valuations can be sustained. South Korea’s exchange also issued a caution on the stock of chipmaker SK Hynix after its value had tripled over 12 months.
Investors’ overnight reaction to better-than-expected revenue and an improved outlook at data and AI company Palantir Technologies <PLTR.O>, which tumbled 8%, highlighted the fresh doubts about the rally’s longevity.
Palantir stock fell another 3% after the bell in New York, though it is still up more than 150% so far in 2025.
That outpaces even AI poster-child Nvidia, which has gained nearly 50% in a market that has gotten so frothy it’s begun to draw comparisons to the dot-com bubble.
Palantir traded at nearly 250 times its 12-month forward earnings estimates. AI chip frontrunner Nvidia is at 33.
“At some point, profits need to be booked. Especially when we’ve seen repeatedly solid runs to record highs,” said Matt Simpson, senior market analyst at StoneX in Brisbane.
CHINA STEADY, YEN AND BONDS FIRMER
Chinese shares steadied with the CSI 300 mostly flat after a private sector gauge of service sector PMI activity expanded at its slowest pace in three months.
The U.S. dollar dropped 0.2% against the yen to 153.36 after the release of minutes from the Bank of Japan’s September policy meeting.
The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, edged back after touching a five-month high of 100.25.
The yield on benchmark 10-year Treasury notes edged lower to 4.058% compared with its U.S. close of 4.091% on Tuesday.
Bitcoin fell below $100,000 for the first time since June and was choppy afterwards, with the cryptocurrency last up 1% at $101,233.90. Gold rebounded after three consecutive days of losses, and was trading 0.2% higher at $3,938.54 per ounce. [GOL/]
The European single currency held steady at $1.1487 after hitting a three-month low following five straight days of declines.
Brent crude was last 0.6% lower at $64.05 per barrel.
(Reporting by Gregor Stuart HunterEditing by Shri Navaratnam)
