Asian Markets Mixed as Investors Assess Wall Street Sentiment and Tech Sell-off
Asia-Pacific markets opened mixed on Wednesday as investors assessed whether a rebound in technology stocks could stabilise market sentiment following a heavy sell-off on Wall Street that dragged down regional markets the previous day.
Market participants are still scrutinising pressure on the global technology sector, particularly after semiconductor-related stocks experienced sharp corrections, sparking concerns that the artificial intelligence (AI) rally is beginning to face fundamental challenges beyond technical factors.
In Japan, the Nikkei 225 index weakened by 0.2% in early trade. Meanwhile, South Korea’s Kospi index surged more than 2% after plunging around 10% the day before. Australia’s S&P/ASX 200 moved sideways, trading relatively flat. Futures contracts for Hong Kong’s Hang Seng index were at 23,498, higher than the previous close of 23,336.28.
The selling pressure was triggered by a sell-off in stocks linked to the semiconductor industry. The VanEck Semiconductor ETF (SMH) closed down 7% on Tuesday, while Intel shares fell 6% and Qualcomm corrected by 8%. In contrast, investors rotated into defensive stocks deemed safer amid rising volatility. Walmart shares rose nearly 2%, and IBM gained around 5%.
Dan Skelly, Head of Research at Morgan Stanley Wealth Management, stated that market concerns are not solely derived from technically overbought conditions. He highlighted emerging fundamental risks that could weigh on technology stock valuations, including increasing price competition among AI model developers and declining rental rates for older-generation GPUs. Additionally, Microsoft’s strategic shift towards focusing on lower-cost AI models has drawn investor attention.
The market is also awaiting Micron’s earnings report, scheduled for release after the local market close on Wednesday. According to a FactSet survey, analysts expect the company to report earnings of US$20.83 per share on revenue of US$35.75 billion. Micron’s stock has recorded extraordinary gains throughout 2026 and briefly touched a new all-time high on Monday. However, Jay Woods, Chief Market Strategist at Freedom Capital Markets, warned that the stock could face a correction following the earnings release, potentially declining to the US$1,000 level. While such a drop would be significant, he noted it would still align with the stock’s technical trends and its 20-day moving average.
Beyond Micron’s report, investors will also monitor Paychex’s performance, scheduled to release its earnings before the market opens. US economic data, including building permits and new home sales figures for May, will also be in focus as markets gauge the latest state of the economy.