Key insights
- The Kospi retreated from record highs amid concerns about concentration risk in AI stocks and uncertainty surrounding Trump-Xi talks. Xi warned of potential conflicts over Taiwan, adding geopolitical risk. While US futures were little changed, the article highlights the sensitivity of global markets to US-China relations, particularly regarding trade and technology, which could negatively impact US equities if tensions escalate.
In this article
South Korea's benchmark Kospi gave up earlier gains to fall 1.35% on Friday, retreating from a fresh record high above 8,000 as broader Asia-Pacific markets fell. Investors were tracking the second day of high-stakes talks between U.S. President Donald Trump and Chinese President Xi Jinping.
The small-cap Kosdaq was down 2%. Japan's Nikkei 225 declined 0.9% and the Topix was flat. In Australia, the S&P/ASX 200 lost 0.25%.
Hong Kong's Hang Seng index slid 0.39% while the CSI 300 opened flat.
The Kospi topped 7,000 for the first time on May 5 after index heavyweight Samsung Electronics reached a record high to cross $1 trillion in market capitalization.
The record-breaking streak comes amid concerns of concentration risks, particularly in artificial intelligence stocks. Samsung Electronics and SK Hynix together made up a record 42.2% of the Kospi in May, according to Manulife Investment Management.
The earlier gains in South Korea's market reflected investor optimism that the Trump-Xi talks could ease tensions around trade and technology exports, particularly for chipmakers and AI-related stocks.
Shares of Samsung Electronics fell 1% after its labor union said the company has proposed resuming wage talks without preconditions. The union said it was willing to return to negotiations after June 7, while its leader added that workers would continue to exercise rights guaranteed under South Korea's constitution.
Trump arrived in Beijing on Wednesday for the closely watched summit, joined by a delegation of American business leaders, including Tesla CEO Elon Musk and Nvidia chief Jensen Huang.
Xi warned Trump on Thursday that Washington and Beijing could face "clashes and even conflicts" if the sensitive issue of Taiwan independence is mishandled.
Failure to handle the matter "properly" could place "the entire relationship in great jeopardy," Xi was quoted as saying.
U.S. stock futures were little changed on Thursday night. Dow futures fell by 10 points, or 0.02%. S&P 500 futures dipped 0.02%, and Nasdaq 100 futures rose 0.06%.
Overnight in the U.S., the Dow Jones Industrial Average retook 50,000 after Cisco Systems reported strong earnings. The 30-stock index popped 370.26 points, or 0.75%, to end at 50,063.46.
The S&P 500 climbed 0.77% and closed at 7,501.24, while the Nasdaq Composite gained 0.88% to 26,635.22. Those two indexes scored fresh all-time intraday highs and record closes.
— CNBC's Justina Lee, Sean Conlon and Lisa Kailai Han contributed to this report