All that left MSCI’s broadest index of Asia-Pacific shares outside Japan down 1.6% in early Asia trade

Asian share markets dropped on Friday as investors took profits on technology stocks and turned defensive ahead of the weekend.

An AI-driven rally that boosted stocks earlier in the week fizzled out as chipmaker Broadcom reported underwhelming results.

All that left MSCI’s broadest index of Asia-Pacific shares outside Japan down 1.6% in early Asia trade. Tech-heavy Kospi slid more than 6% and Nikkei dropped 1.3%.

It seems like quite a risk-off today, said Charu Chanana, chief investment strategist at Saxo.

Korea has been one of the biggest beneficiaries of the AI memory supercycle, so when Broadcom disappointed on AI expectations, investors quickly de-risked the whole semiconductor chain, she said.

The issue is not that AI demand has disappeared – it is that expectations had become extremely high, and even good numbers are no longer enough unless guidance keeps moving higher, she said.

Brent crude futures were steady at $95 a barrel and on track to rise more than 3% for the week.

Kristian Kerr, head of macro strategy at LPL Financial, said markets were underestimating the complexities involved in restoring shipping through the Strait ​of Hormuz to pre-war levels, even if Washington and Tehran reach a memorandum of understanding.

Any early increase in barrels is likely to come ‌from already produced crude, including crude sitting on stranded or floating vessels and Iranian cargoes in storage, rather than a sustained restart in production or exports, he said.

In other words, this is more about clearing existing bottlenecks than reflating ​the supply base, he said.

The yen languished ‌near the 160 per dollar level and was last at 159.96, as Japanese officials ramped up warnings on the currency, keeping traders on alert for further intervention from Tokyo.

Data on Friday showed Japan’s foreign reserves dropped by $77 billion in May.