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Asian technology stocks fell sharply on Monday as hawkish comments from Federal Reserve Chair Kevin Warsh strengthened expectations for a September U.S. interest rate hike, while renewed U.S.-Iran tensions and rising oil prices further weakened investor sentiment.
South Korea’s KOSPI dropped 2.1%, Japan’s Nikkei 225 declined 1.7%, and the TOPIX lost 0.7%. Taiwan’s Taiex also fell about 1.9%, reflecting broad pressure on technology and semiconductor shares.
The selloff followed Warsh’s warning that the Fed still had “work to do” if policymakers were not convinced underlying inflation was moving toward the central bank’s 2% target. Markets now price in a 57% chance of a September rate hike, compared with roughly 35% before his Jackson Hole speech. The U.S. two-year Treasury yield subsequently climbed to a one-month high near 4.33%.
Higher borrowing costs are particularly challenging for technology stocks because rising yields reduce the present value of future earnings. U.S. markets also pointed lower, with Nasdaq 100 futures falling 0.6% and S&P 500 futures declining 0.4% during Asian trading.
South Korean semiconductor stocks were among the biggest losers. SK Hynix fell 3.5% to 1.595 million won, while Samsung Electronics declined 2.5% to 250,500 won. Taiwan Semiconductor Manufacturing Co. dropped 1.7%.
SK Hynix and Samsung remain major Asian beneficiaries of Nvidia’s artificial intelligence infrastructure boom due to their high-bandwidth memory exposure. However, elevated valuations have made semiconductor stocks increasingly sensitive to interest rates and shifts in risk appetite.
Chinese and Hong Kong technology shares also weakened. The Hang Seng fell 0.8%, the CSI 300 declined 0.9%, and the Shanghai Composite lost 0.3%. SMIC and Guoxin Technology dropped more than 2%, while NetEase, Xiaomi and Baidu fell more than 1%. Alibaba declined around 1%, and Tencent slipped roughly 1.5%.
Investors will now focus on upcoming U.S. labor-market and inflation reports for clues on whether expectations for a September Fed rate hike will strengthen further.
