Asian Stocks Decline as Tech Sell-Off Deepens, Geopolitical Risks Rise

Asian stock markets broadly declined on Friday, following a weak session on Wall Street as a sell-off in technology shares intensified. Investor sentiment was also dampened by escalating geopolitical tensions in the Middle East, which drove a surge in oil prices.

Tech Sector Leads Regional Decline

Japan's Nikkei 225 was the region's worst performer, closing down 4%, while the broader TOPIX index fell 2.6%. The losses were driven by heavyweight semiconductor and technology stocks, mirroring overnight declines in the U.S.

Even positive corporate news failed to lift the sector. Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, saw its shares slide 5% despite reporting stronger-than-expected earnings and a positive outlook driven by artificial intelligence demand. According to the report, investors were spooked by the company's sharp increase in its capital expenditure forecast, raising concerns about the high costs associated with the AI boom.

Other major indexes in the region also fell:

• China's Shanghai Composite slipped 1.6%, and the blue-chip CSI 300 lost 2.5%.
• Hong Kong's Hang Seng index declined 2%.
• Australia's ASX 200 edged down 0.5%.

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South Korean markets were closed for a public holiday. Futures for the S&P 500 were down 0.5% during Asian trading hours, indicating the potential for continued weakness in U.S. markets.

Geopolitical Tensions and Oil Prices Weigh on Sentiment

Market sentiment remained fragile amid an intensifying conflict between the United States and Iran. The U.S. military reportedly carried out a sixth consecutive night of strikes, stoking fears of potential oil supply disruptions through the critical Strait of Hormuz.

These concerns pushed crude oil prices significantly higher. Both Brent and U.S. West Texas Intermediate futures were on track for weekly gains of more than 10%, their largest such advance since April. The surge in energy prices is fueling investor anxiety that renewed inflation could complicate the policy path for central banks, just as recent data had raised hopes for stable interest rates.