Markets woke to tension and quick repositioning on Friday: a U.S. technology-led rout spilled into Asia, cryptocurrencies slumped and precious metals swung wildly as investors scrambled for shelter.
Tokyo offered a reminder that regional moves were far from uniform. Japan’s market steadied around the weekend’s general election, with the Nikkei showing resilience even as software and chip-related names wobbled. Elsewhere, however, indexes from Hong Kong to Sydney felt the sting of the sell-off — Australia’s market was particularly sensitive after the Reserve Bank flagged a firmer stance on rates.
Why tech stumbled
The immediate trigger was another wave of profit-taking in big tech and enterprise software. Fears that massive AI investments may not deliver the expected returns this year — combined with fresh signs of elevated spending plans from major U.S. companies — pushed traders away from richly priced growth bets. Software firms bore the brunt: services and SaaS names that had run up on the promise of AI saw abrupt re-pricing.
A handful of headline moves amplified the mood. After-hours capital spending plans from large U.S. retailers and cloud companies, and competing advances in generative AI tools, stirred questions about who benefits and who gets disrupted. That uncertainty cascaded through global markets, where momentum can quickly become a self-fulfilling push lower.
Flight to safety — and some strange bedfellows
When growth assets wobble, money often finds its way into havens. Gold and silver came alive this session: gold extended gains and traded near multi-thousand-dollar levels per ounce in some quotes, while silver posted sharp daily moves as traders hunted for alternatives to risk assets. At the same time, bitcoin and other cryptocurrencies were not spared — bitcoin tumbled roughly 8–12% in the most volatile stretches, erasing a large portion of recent gains and testing investor conviction.
Commodities and FX reflected the repricing. Oil held modestly firm, but currencies tied to rate expectations — and countries with hawkish central banks — outperformed or underperformed in line with local rhetoric. Australia’s S&P/ASX slid on the hawkish signal from its central bank; traders recalibrated odds for future policy tightening.
Local stories that mattered
Japan’s political calendar added an overlay of caution and support. With a general election imminent, some domestic buying helped blunt the sell-off in Tokyo even as Japanese tech and software companies saw steep moves. Nintendo, for instance, suffered a notable drop despite reaffirming optimistic console sales figures — investors were still weighing component-cost risks and near-term profit visibility. That episode ties back to broader industry questions about supply chains and memory-chip pricing even as the company sticks to its outlook (see coverage of Nintendo’s sales momentum and release plans at Nintendo Raises Switch 2 Forecast as Console Sales Soar, Citing ‘Historic’ Momentum and Nintendo Reconfirms Big Switch 2 Release Schedule as Third‑Party Support Surges).
South Korea and Taiwan, with deep exposure to semiconductors, slipped as chip-related stocks followed global weakness in that sector. Hong Kong’s Hang Seng and mainland benchmarks also traded lower, though intraday moves showed rapid rotation between winners and losers.
What this means for investors
Volatility is back in force. For traders, that means shorter horizons and tighter risk controls. For longer-term investors, the episode is a reminder that lofty valuations — especially where AI and growth expectations are already priced in — can reverse quickly when the data or headlines disappoint.
Safe-haven flows into gold and select sovereign bonds suggest a risk-off tilt; at the same time, the crypto sell-off underscores how correlated risk assets can become when sentiment shifts. Central-bank signaling, corporate capital plans, and the next batch of macro data will likely shape whether this is a transient pullback or the start of something broader.
Markets will keep watching corporate earnings, capex intentions and whether spending on AI actually translates into measurable margins. For now, expect chop: sudden drops in some names, quick rebounds in others, and no shortage of headlines to keep desks busy.
If you trade or invest through turbulent times, clarity around position sizing and stop strategies will matter more than chasing short-term rebounds. And for those trying to read the tea leaves: policy comments from major central banks and the next round of corporate updates are likely to determine whether calm returns or nervousness deepens.