Asian shares fall after Alphabet earnings miss forecasts

Asian stock markets experienced a mixed reaction on Thursday after Alphabet's disappointing earnings report. The company's shares plummeted 10% in after-hours trading, erasing nearly US$400 billion from its market value. This decline had a ripple effect, causing Nasdaq futures to drop 1% lower and sending Asian shares in a downward spiral.

The South Korean Kospi index fell 2.6% following its 7% surge the previous day. Meanwhile, MSCI's broad Asia-Pacific index excluding Japan dropped 0.7%, while Japan's Nikkei gained only 0.3%. Mainland China's blue chips declined by 0.9%, and Hong Kong's Hang Seng index rose 0.2%.

Alphabet's earnings miss was primarily attributed to the impact of the AI boom on its traditional ad revenue. However, both Alphabet and Microsoft assured that AI-generated revenue remains strong, driven by robust growth in data centers and cloud services.

Meanwhile, the Federal Reserve maintained interest rates as expected during its meeting, with two committee members voting for an increase. Chair Kevin Warsh expressed optimism about inflation, which sparked a rally in Treasuries. However, the Bank of Canada recently raised rates for the first time in over three years, signaling potential future hikes. The European Central Bank is expected to keep rates steady later on Thursday.

Brent crude futures declined 0.4% to US$114.91 a barrel after reports of US Vice-President JD Vance's efforts to revive peace negotiations with Iran.