Nikkei 225 leads Asian markets rout as TSMC fails to restore confidence

Asian stocks opened lower on Friday as the global retreat from semiconductor shares gathered pace, leaving the region’s chip-heavy markets exposed to another round of selling.

Japan’s Nikkei 225 slid 2.8%, while MSCI’s gauge of Asia-Pacific shares outside Japan edged 0.1% lower.

Nasdaq 100 futures dropped 0.7% and S&P 500 contracts lost 0.4%.

South Korean markets were closed for a holiday after regulators unveiled measures to curb speculation in leveraged single-stock funds.

Oil, meanwhile, headed for its strongest weekly advance since April as renewed US strikes on Iran kept supply risks elevated.

AI trade confronts an expectations reset

The latest decline reflects more than a single disappointing earnings report.

Investors have been rotating out of semiconductor and hardware names after a powerful first-half rally left valuations dependent on near-perfect execution.

Even TSMC’s 77% increase in quarterly profit failed to stabilise the sector this week, reinforcing the sense that strong AI demand is already embedded in share prices.

HSBC strategists said concerns about excess capacity have resurfaced, although underlying investment and earnings trends remain supportive.

Asia is particularly vulnerable because chipmakers carry large weights in markets including Japan, Taiwan and South Korea.

Seoul’s regulators have halted new listings of single-stock leveraged ETFs and will raise the minimum deposit required to trade them to 30 million won.

The measures follow extreme swings in products linked to Samsung Electronics and SK Hynix.

Oil surge keeps inflation risk alive

Brent crude rose 0.7% to $84.83 a barrel, putting it on course for a weekly gain of more than 11%. US crude traded near $79.50, with a similar advance for the week.

US Central Command said it completed another wave of strikes against Iranian military targets on Thursday.

The renewed campaign has widened the risk premium around Middle East supply routes and raised the possibility of damage to energy infrastructure.

Macquarie strategist Thierry Wizman said Washington and Tehran appeared further from compromise, leaving markets vulnerable to further escalation.

Higher oil prices also complicate the relief delivered by softer US consumer and producer inflation data this week.

Traders have reduced near-term Fed tightening bets but still price about 27 basis points of increases by December.

Yen weakness deepens Japan’s pressure

The yen hovered near 162.4 per dollar, close to its weakest level in four decades, adding to the strain on Japanese assets.

Finance Minister Satsuki Katayama again warned against excessive currency movements as traders remained alert to intervention.

Tokyo is also considering ways to encourage the Government Pension Investment Fund and other large institutions to allocate more capital domestically.

UBS economist Daiju Aoki said repatriation expectations could temporarily support equities and lower government-bond yields.

That support may prove limited if earnings expectations weaken.

For Asian markets, the immediate question is whether the chip retreat remains a valuation reset or develops into a broader challenge to the AI investment cycle.