Asian Markets Drop as Nvidia’s AI Rally Fades

February 29, 2025 | DailyForex.pk

Asian stock markets dipped on Thursday, struggling to sustain momentum despite Nvidia’s (NASDAQ: NVDA) strong earnings. Investors appeared unimpressed by the semiconductor giant’s latest financial results, leading to a decline in tech stocks across the region.

Meanwhile, Hong Kong’s Hang Seng Index fell from a three-year high, as traders locked in profits after weeks of gains fueled by artificial intelligence (AI) optimism. Broader Asian markets also showed weakness, mirroring the mixed sentiment on Wall Street. Tech stocks in Asia faced selling pressure as investors assessed the AI stock rally’s sustainability and Nvidia’s earnings impact on global markets.

Tech Stocks Drop Despite Nvidia’s Strong Q4 Earnings

Despite Nvidia posting better-than-expected Q4 earnings and providing strong forward guidance, the company’s stock slipped 2% in aftermarket trading. Analysts cited external market uncertainties, including shifting AI trends, rising competition in AI stocks, and increasing pressure from Chinese tech firms like DeepSeek AI. Investors remain cautious about Nvidia’s stock performance, as concerns over AI sector growth, chip demand fluctuations, and U.S.-China trade tensions continue to impact market sentiment.

Tech-heavy Asian indices tracked Nvidia’s weakness:

• South Korea’s KOSPI fell 0.8% as key chipmakers declined.
• Japan’s Nikkei 225 struggled for direction, trading flat.
• Nvidia’s Asian suppliers, including TSMC (TW:2330), SK Hynix (KS:000660), and Advantest (TYO:6857), saw losses ranging between 0.4% and 4%.

Investment firm Summit Insights downgraded Nvidia to Hold, citing concerns over the company’s risk-reward balance. Analysts pointed out that the AI industry is evolving rapidly, shifting from model training to more efficient inference systems, which could impact Nvidia’s long-term growth.

Hong Kong Stocks Drop After Reaching a Three-Year High

Hong Kong’s Hang Seng Index declined 0.6% following a rally that pushed it to its highest level since 2022. Investors took profits after a strong month driven by Chinese tech giants like Baidu (NASDAQ: BIDU), Alibaba (HK:9988), and Tencent (HK:0700), which had previously surged on AI enthusiasm.

Adding to the caution, U.S. President Donald Trump recently signed an executive order outlining potential new restrictions on China, which weighed on sentiment in mainland Chinese markets.

Chinese Markets Pull Back Amid Trade War Uncertainty

• Shanghai Shenzhen CSI 300 Index dropped 0.3%.
• Shanghai Composite Index declined 0.5%.
• Ongoing U.S.-China tensions and the threat of new tariffs pressured investor sentiment.

Broader Asian Markets Show Mixed Performance

• Japan’s TOPIX gained 0.5%, buoyed by gains in major trading houses, despite a 10% drop in retail giant Seven & i Holdings (TYO:3382) after a failed privatization deal.
• Australia’s ASX 200 rose 0.4%, supported by strong earnings from Qantas Airways (ASX:QAN) and Coles Group (ASX:COL), which offset weak Q4 capital expenditure data.
• Singapore’s Straits Times Index traded flat.
• India’s Nifty 50 futures signaled a flat open, as Indian equities continued to face downward pressure.

Looking Ahead: Key Market Triggers

Investors are closely monitoring:

• U.S. GDP and PCE Price Index data due later this week.
• Geopolitical tensions surrounding U.S. trade policies and the Russia-Ukraine peace deal progress.
• Tech earnings reports, with further AI-related stock movements likely to dictate market trends.

As uncertainty looms over tech valuations, U.S. trade policies, and inflation data, Asian markets may remain volatile in the coming days. Stay updated with DailyForex.pk for the latest financial market insights!