Asian stocks lean lower due to tech sell-off, rising US-Iran tensions

Asian stocks face downward pressure on Thursday, delivering mixed results as a renewed sell-off in semiconductor shares dragged down the tech sector. The retreat stems from persistent investor skepticism over whether the artificial intelligence rally can sustain its current valuations.

Japan’s Nikkei 225 falls 2.55% to trade around 67,000; South Korea’s KOSPI declines 6.43% to trade near 6,820; and China’s SSE Composite loses 0.82%, trading around 3,920. However, Hong Kong’s Hang Seng rises 1.93% to trade around 25,150 at the time of writing.

Traders are adopting an increasingly cautious stance as escalating military actions in the Middle East drive crude oil prices sharply higher. This sudden energy spike has revived pressing global worries regarding a secondary wave of inflation, which in turn clouds the future path of central bank interest rates.

In Hong Kong, the Hang Seng Index advanced on the back of improving investor sentiment, which was sparked by softer-than-expected US inflation data and broader global optimism. This regional rally saw widespread capital inflows, strongly supported by aggressive buying across the financial, consumer, and technology sectors.

South Korea's benchmark KOSPI plunged aggressively as a sweeping global semiconductor selloff heavily penalized tech shares. Mirroring steep overnight losses suffered by major US chipmakers, the domestic market buckled under reignited anxieties over overstretched artificial intelligence valuations. This triggered severe downward pressure on South Korea's most heavily weighted semiconductor giants, dragging both SK Hynix and Samsung Electronics into a sharp tumble.

In response to domestic economic pressures, the Bank of Korea stepped in by raising its benchmark interest rate by 25 basis points to 2.75%. The increase, which lined up precisely with consensus market expectations, marks the official start of a new monetary tightening cycle. By implementing this defensive policy move, the central bank aims to decisively curb domestic inflation.