Asia report: Markets led lower by regional tech plays

29th Aug 2024 10:09

(Sharecast News) - Asia-Pacific markets largely declined on Thursday, driven by investor reactions to Nvidia's second-quarter results.

The technology sector, in particular, saw significant sell-offs across the region even after the US chipmaker beat Wall Street estimates for the second quarter.

"Regarding Nvidia's much-hyped second-quarter results on Wednesday, it's clear that the numbers alone aren't pushing investors off the cliff - but keep an eye on the US economy, which just might," said SPI Asset Management managing partner Stephen Innes.

"The AI juggernaut delivered some stellar figures, but let's be real - it didn't exactly knock socks off.

"Investors have become spoiled, expecting Nvidia not just to meet but obliterate expectations."

Innes said that the issue was not about balance sheets, but sky-high expectations "nearly impossible" to meet.

"Nvidia is likely to cast a shadow over Asian tech stocks as they wake up, but let's be honest - once everyone realises AI stocks aren't about to plummet to earth, savvy players will likely be itching to buy the dip, especially with vol control funds still on the prowl."

Most markets led lower by regional technology names

In Japan, the Nikkei 225 edged down by 0.02% to 38,362.53, while the Topix saw a marginal gain of 0.03% to close at 2,693.02.

Notable losers on Tokyo's benchmark included Nidec Corporation, which fell 3.32%, and Dainippon Screen Manufacturing, down 2.84%.

China's markets presented a mixed picture - the Shanghai Composite dropped 0.5% to 2,823.11, whereas the Shenzhen Component gained 0.94%, closing at 8,154.44.

Sharp losses were seen in stocks such as Heilongjiang Interchina Water Treatment, which plunged 10.04%.

Hong Kong's Hang Seng Index was one of the few bright spots, rising 0.53% to 17,786.32.

That was largely driven by significant gains in Meituan, up 12.55%, and China Mengniu Dairy, which gained 9.65%.

South Korea's Kospi fell by 1.02% to 2,662.28, with tech stocks bearing the brunt of the losses.

Hanmi Semiconductor plummeted 9.45%, while SK Hynix dropped 5.35%.

In Australia, the S&P/ASX 200 slipped by 0.33% to 8,045.10, weighed down by sharp declines in mining and tech sectors.

Red 5 saw a substantial 12.33% drop, and Mineral Resources fell by 8.08%.

New Zealand's S&P/NZX 50 declined by 0.94% to 12,353.61, with Heartland Group down 11.97% to lead the losses.

In currency markets, the dollar was last down 0.03% on the yen to trade at JPY 144.54, while it weakened 0.55% against the Aussie to AUD 1.4657, and retreated 0.59% from the Kiwi, changing hands at NZD 1.5920.

Oil prices saw minor declines, with Brent crude futures last down 0.17% on ICE at $78.52 per barrel, and the NYMEX quote for West Texas Intermediate slipping 0.07% to $74.47.

Nvidia beats expectations and hikes guidance, but shares still fall

Nvidia was indeed in focus globally, after it posted results for the quarter through July that surpassed Wall Street's expectations.

The graphics and AI chip giant reported $30bn in revenue, marking a 15% increase from the prior quarter and a 122% jump compared to the same period last year.

It also provided a stronger-than-anticipated forecast for the current quarter, and announced a substantial $50bn share buyback programme.

Despite the positive outturn, Nvidia's shares dropped 8% in extended trading and led to a red day for technology plays in the Asia-Pacific region.

Reporting by Josh White for Sharecast.com.