Asian Stocks Slide as Valuation Fears Spark Global Sell-Off
Asian stock markets tumbled sharply on Wednesday, following a broad sell-off on Wall Street driven by concerns over overstretched valuations in the tech sector. The turmoil sent volatility to its highest level in months, rattling investors across the region.
Heavy selling hit Japan and South Korea, where some of the year’s strongest-performing tech stocks faced steep declines. Although losses eased later in the afternoon, markets remained volatile, reflecting deep investor anxiety.
Japan and South Korea Lead Market Declines
Tokyo’s benchmark index plunged nearly 7% from its record high before trimming losses to close 2.8% lower. In Seoul, the KOSPI dropped as much as 6.2% before stabilizing down 2.9%.
The MSCI Asia-Pacific Index (excluding Japan) slipped as much as 2.3%, marking its sharpest fall since Donald Trump’s April tariff announcement, before recovering to 0.9% lower.
U.S. e-mini futures were also weak, extending overnight declines after the S&P 500 fell 1.2% on Tuesday.
“Investors are sitting on large gains, particularly in AI-related stocks, and some are likely taking profits,” said Ed Yardeni, President of Yardeni Research.
Valuation Warnings from Wall Street CEOs
Global markets are now retreating from record highs amid fears that equity valuations have become unsustainable. CEOs from Morgan Stanley and Goldman Sachs have warned of potential corrections, while JPMorgan’s Jamie Dimon recently cautioned that a significant market pullback could occur within the next two years.
Analysts say the AI investment boom has fueled a wave of optimism reminiscent of the dot-com bubble, creating unstable conditions.
“At some point, profits must be booked,” said Matt Simpson, senior market analyst at StoneX. “Many investors are just following the crowd— and right now, the crowd is running.”
Tech Heavyweights Drag Markets Lower
In Japan, SoftBank Group shares fell up to 14.3% after the Nasdaq Composite declined 2% overnight, raising concerns over global tech valuations. In South Korea, SK Hynix tumbled 9.2%, while Samsung Electronics slid 7.8%.
Chinese equities, however, rebounded after early weakness. The CSI 300 rose 0.5% as the State Council Tariff Commission announced a one-year suspension of a 24% additional tariff on U.S. goods, while keeping a 10% levy. The decision followed last week’s meeting between President Xi Jinping and U.S. President Donald Trump.
Currency and Commodity Markets Steady
The U.S. dollar initially weakened against the yen before recovering to trade flat at 153.655, following the release of Bank of Japan policy minutes. The euro edged up 0.1% to $1.1488, bouncing from a three-month low.
Meanwhile, the U.S. dollar index stabilized near 100.25, its highest level in five months. Yields on 10-year U.S. Treasury notes dipped to 4.05% before rebounding to 4.08%.
In commodities, Bitcoin briefly fell below $100,000 for the first time since June but later rebounded 1.5% to $101,814.50. Gold rose 1% to $3,971.60 per ounce, ending a three-day losing streak, while Brent crude edged 0.1% higher to $64.51 per barrel.
