According to Bloomberg, US stock futures slipped on Friday morning, falling around 0.6%, a day after a positive session in the S&P 500. The broadcaster reported that the move reflects a broader pullback in the artificial intelligence trade that has been unfolding across markets over roughly the past ten days, cooling one of the year's most powerful rallies.
According to Bloomberg, the latest leg of the retreat came after Broadcom provided a weaker-than-expected outlook for its artificial intelligence business. The broadcaster reported that the disappointing guidance weighed on sentiment well beyond the United States, dragging down a range of technology-linked stocks across Asia as investors reassessed the outlook for the sector.
According to Bloomberg, Asian equities followed Wall Street lower, falling about 1.6% and led by South Korea's Kospi. The broadcaster reported that the Kospi dropped as much as 7% at one point in the morning before paring some of its losses, while the small-cap Kosdaq gauge saw similar moves, underscoring the scale of the sell-off in Korean markets.
According to Bloomberg, the pressure was not limited to equities. The broadcaster reported that foreign selling of Korean stocks also dragged the won weaker by almost 8%, with the Kospi down close to 5% on the day. The combination of falling shares and a softer currency highlighted how sharply sentiment had turned against Korean assets in a single session.
According to Bloomberg, the steep declines followed an exceptionally strong run for Korean stocks. The broadcaster reported that South Korea had been outperforming its Asian peers this year, with the Kospi standing as the world's best-performing gauge, up more than 100%. As a result, any pullback in the technology rally was likely to trigger significant profit-taking among investors.
According to Bloomberg, the market's volatility was tied in part to its narrow concentration. The broadcaster reported that the Kospi's gains have been driven largely by two chipmakers, Samsung and SK Hynix, meaning that any moves in these two names tend to trigger outsized swings. At the same time, the intraday rebound suggested there was still appetite for dip-buying on expectations for Korean corporate earnings.
According to Bloomberg, other corners of the market were more subdued. The broadcaster reported that oil prices gained slightly, while the yield on the 10-year US note was little changed as investors awaited key economic data from the United States. It added that, despite the disappointing results that rattled markets, Broadcom's chief executive was playing down the concerns surrounding the company.