Tokyo

Asian shares retreated, tracking a decline on Wall Street led by technology shares including Nvidia and other stars that have been riding the mania surrounding artificial-intelligence.

Benchmarks fell in Japan, South Korea and Taiwan, pulled lower by selling of computer chip makers.

Tokyo's benchmark Nikkei 225 declined 1.7 per cent to 42,787.28.

Japan reported its exports fell slightly more than expected in July, pressured by higher tariffs on goods shipped to the US.

Computer-chip equipment makers Advantest plunged 6.6 per cent and Disco Corp. dropped 4.7 per cent. Chip maker Tokyo Electron lost 1.9 per cent and Lasertec Corp. lost 1.8 per cent.

The Taiex in Taiwan fell 2.4 per cent after chip maker TSMC dropped 3.8 per cent.

Hong Kong's Hang Seng slipped 0.6 per cent to 24,980.20 while the Shanghai Composite index edged 0.1 per cent lower to 3,725.22 after China's central bank opted to keep the benchmark interest rate unchanged, as markets had expected.

Australia's S&P/ASX 200 gained 0.2 per cent to 8,917.60.

South Korea's Kospi dropped 1.4 per cent to 3,096.09, as North Korean leader Kim Jong Un condemned South Korean-US military drills that began this week, and vowed a rapid expansion of his nuclear forces to counter rivals, according to North Korean state media.

On Wednesday, the S&P 500 fell 0.6 per cent to 6,411.37, for a third straight loss. It remains near its all-time high set last week.

The Dow Jones Industrial Average added less than 0.1 per cent to 44,922.27, and the Nasdaq composite slumped 1.5 per cent to 21,314.95.

The heaviest weight on the market was Nvidia, whose chips are powering much of the move into AI. It sank 3.5 per cent.

Another AI darling, Palantir Technologies, dropped 9.4 per cent for the largest loss in the S&P 500. It's seen bets build up sharply that its stock price will drop, according to S3 Partners. Only Meta Platforms has seen a bigger increase this year in what's called “short interest,” where traders essentially bet a stock's price will fall. Meta, the owner of Facebook and Instagram, sank 2.1 per cent.

Criticism has been rising that stock prices across Wall Street have shot too high, too fast since hitting a bottom in April and have become too expensive. Palantir's stock came into Tuesday with a tremendous gain of 130 per cent for the year so far.

The priciness of AI-related shares and potential for further trade restrictions in the strategically important chip industry prompted investors to sell.

Home Depot's gain of 3.2 per cent was the biggest reason the Dow did better than other indexes. The retailer reported results for the latest quarter that were a bit short of what analysts expected, but it delivered growth in revenue and stood by its prior forecasts for revenue and profit over the full year.

The week's headliner for Wall Street is likely arriving on Friday. That's when the chair of the Federal Reserve, Jerome Powell, will give a highly anticipated speech in Jackson Hole, Wyoming.

The setting has been home to big policy announcements from the Fed in the past, and the hope on Wall Street is that Powell may hint that cuts to interest rates are coming soon.

The Fed has kept its main interest rate steady this year, primarily because of the fear of the possibility that President Donald Trump's tariffs could push inflation higher. But a surprisingly weak report on job growth across the country may be superseding that.

Traders on Wall Street widely expect the Fed to cut interest rates at its next meeting in September in order to give the economy a boost. Treasury yields have come down notably in the bond market as a result, and they eased on Tuesday.

Strategists at Bank of America warn that Powell may not sound as inclined to cut interest rates as the market is expecting. He could remain non-committal and discuss the possibility of a worst-case scenario for the economy called “stagflation.” The Fed has no good tool to fix that situation, where the economy stagnates at the same time as inflation remains high.

In other dealings early Wednesday, benchmark US crude added 12 cents to USD 61.89 a barrel. Brent crude, the international standard, gained 11 cents to USD 65.90 a barrel.

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The US dollar edged down to 147.52 Japanese yen from 147.66 yen. The euro cost USD 1.1636, down from USD 1.1648.