Tech Rout Drags Asian Markets as Australia Raises Rates to 2008 Levels

Asian equity markets traded in opposite directions on Tuesday, with technology-heavy indexes falling to three-month lows while others posted modest gains.

The divergence followed a volatile session on Wall Street, where tech stocks sold off despite a broader market rally. South Korea’s Kospi index dropped 4 percent to close at 5,626.08. The decline was driven by heavy losses in semiconductor makers, with SK Hynix down 5.7 percent and Samsung Electronics down 4 percent. These moves erased the gains recorded on Monday. In Taiwan, the Taiex index slipped 3.8 percent, weighed down by a 7.6 percent plunge in Mediatek shares and a 1.9 percent drop in Taiwan Semiconductor Manufacturing Corp. Tokyo markets remained closed for a holiday.

In contrast, the Hang Seng Index in Hong Kong rose 0.4 percent to 23,474.98. India’s Sensex index climbed 1.1 percent. Australia’s S&P/ASX 200 gained 0.3 percent to close at 8,880.50. The Shanghai Composite fell 1.4 percent to 3,588.50, hovering near its lowest level in more than a year. Investors appeared to lose faith in market-supporting measures announced in China on Monday, as those gains proved short-lived.

The Reserve Bank of Australia raised its benchmark interest rate by 0.25 percentage points on Tuesday. The move pushed the cash rate to 4.85 percent, the highest level since December 2008. This marks the fifth rate hike of the year. Governor Michele Bullock stated that inflation remains broadly based. She noted that higher fuel and commodity prices resulting from the Middle East conflict contribute to the trend. Additionally, rapid growth in prices for technology goods, driven by AI-related investment, keeps inflation high across many sectors.

Oil prices moved higher on Tuesday amid continued uncertainty regarding the war with Iran. Brent crude, the international standard, rose 1 percent to $105.85 per barrel. U.S. benchmark crude increased 1.1 percent to $97.48 per barrel. Prices have fluctuated between $70 and $120 per barrel since the conflict began, reversing direction quickly. The latest profit reports from major technology companies have intensified concerns about the AI sector. Alphabet burned through more cash than expected in the latest quarter, and its search business growth slowed. The stock initially rallied 2.6 percent on Monday but finished down 0.3 percent. Nvidia similarly moved from an early gain of 2.6 percent to a final loss of 1.3 percent.

Despite the weakness in tech giants, nearly 70 percent of stocks in the S&P 500 index rose on Monday. A report from the Institute for Supply Management indicated that U.S. manufacturing improved last month by more than economists predicted. The same survey showed that prices in the sector are rising at a slower pace. The U.S. dollar fell to 157.84 Japanese yen from 157.95. The euro gained ground, rising to $1.1198 from $1.1188.

The S&P 500 had reached a record high last month, supported by expectations of continued profit growth in the U.S. economy. However, the recent 7.6 percent drop in Brent crude prices had earlier supported equity values. Investors are now watching whether Big Tech companies can justify the hundreds of billions of dollars being poured into AI data centers. The mixed signals from corporate earnings and global policy decisions continue to drive volatility in both energy and technology sectors.