Asian shares experienced a significant retreat on Friday, mirroring a substantial tumble on Wall Street that marked one of its worst days since April. This global market downturn was primarily fueled by ongoing concerns over the valuations of artificial intelligence (AI) superstar stocks, which continued to drop amidst fears their prices had climbed excessively high. U.S. futures remained nearly unchanged, while oil prices saw an advance.

The U.S. stock market had already tumbled on Thursday, recording one of its worst performances since its springtime sell-off. The S&P 500 sank 1.7% to 6,737.49, moving further away from its late-month all-time high, marking its worst day in a month and second-worst since April. The Dow Jones Industrial Average dropped 1.7% from its record, settling at 47,457.22, while the Nasdaq composite lost 2.3% to 22,870.36. Nvidia, a leading chip company, was the heaviest drag on the market, falling 3.6%. Other AI-related stocks also struggled, with Super Micro Computer dropping 7.4%, Palantir Technologies down 6.5%, and Broadcom declining 4.3%. Questions have intensified regarding how much higher these AI darlings can climb after their spectacular gains, drawing comparisons to the dot-com bubble of 2000, which eventually burst and caused a nearly 50% drop in the S&P 500.

Beyond AI stocks, investor sentiment was further dimmed by doubts surrounding whether the Federal Reserve would deliver anticipated interest rate cuts. Traders on Wall Street had been banking on these cuts, which can invigorate the economy and boost investment prices, despite potential inflationary effects. However, expectations for a third rate cut this year have sharply declined, with data from CME Group showing a coin flip’s chance of 51.9% for a December cut, down from nearly 70% just a week prior. A halt in rate reductions could undermine U.S. stock prices, which had already run to records partly on these expectations.

Across Asia, South Korea’s Kospi led the regional decline, falling 3.2% to 4,038.61 amid the global tech sell-off, with Samsung Electronics shedding 4.1%, SK Hynix down 6.4%, and LG Energy Solutions giving up 3.7%. Taiwan’s Taiex also lost 1.7%. Japan’s Nikkei 225 fell nearly 1.7% to 50,438.99, reversing previous gains, with SoftBank Group plunging 5.7% due to losses in its technology and AI investments.

In Chinese markets, Hong Kong’s Hang Seng index shed 1.3% to 26,732.99, and the Shanghai Composite index slipped nearly 0.2% to 4,022.89. This occurred as new data on Friday revealed China’s factory output grew at a 14-month low of 4.9% year-on-year in October, falling short of expectations and September’s 6.5%. Investment in fixed assets, such as factory equipment, also declined 1.7% year-on-year in the January to October period, with persistent weakness in property investments identified as a key factor dragging on business investment. Elsewhere in the region, Australia’s S&P/ASX 200 dropped 1.4% to 8,628.30 as hopes for a Reserve Bank of Australia rate cut faded following a strong jobs report, and India’s BSE Sensex slid 0.4%.

In other market dealings early Friday, U.S. benchmark crude oil added 90 cents to $59.59 per barrel, while Brent crude, the international standard, rose 87 cents to $63.88 per barrel. The U.S. dollar slightly slipped to 154.47 Japanese yen from 154.54 yen, and the euro advanced to $1.1641 from $1.1635.