Asian stock markets drop, Nikkei leads losses

Nikkei 225 was the worst performer in Asia, slipping 4% on losses in heavyweight chip-related stocks, while the broader TOPIX dropped 2.6

Most Asian stock markets dropped on Friday, with Nikkei leading losses as technology shares extended a worldwide selloff and investors remained cautious over escalating Iran-U.S. tensions that continued to support oil prices.

Nikkei 225 was the worst performer in Asia, slipping 4% on losses in heavyweight chip-related stocks, while the broader TOPIX dropped 2.6.

Investors continued to trim semiconductor holdings despite stronger-than-expected earnings and an upbeat outlook from TSMC, suggesting lofty expectations had already been priced into the sector. Murata Mfg Co and Kioxia Holdings Corp were both major decliners on the Nikkei.

TSMC slipped 5% in Taiwan trade, even as the world’s biggest contract chipmaker flagged continued artificial intelligence-driven demand in the coming quarters. But a sharp rise in the chipmakers capital expenditure forecast for the year spooked markets already on edge over sky-high spending on AI.

Losses in tech spilled over into broader sectors. Shanghai Composite slid 1.6%, while the blue-chip Shanghai Shenzhen CSI 300 declined 2.5%. Hang Seng dived 2%.

South Korean markets were closed for a public holiday after suffering steep losses earlier in the week amid a sharp selloff in semiconductor shares.

ASX 200 and Straits Times index edged 0.5% lower each. Data released on Friday showed Singapore’s key non-oil exports grew less than expected in June after several months of stellar growth.

Nifty 50 index advanced 0.6% in early trade.

Market sentiment remained fragile as the war between Iran and U.S. intensified.

Brent crude was on track for weekly gains of more than 10%, their biggest weekly rise since April.

Higher oil prices also fuelled concerns that renewed energy inflation could complicate the outlook for central banks.