Key Highlights

● Asian markets gave back ground a day after a chip-fueled rally.

● A report said Nvidia's board was weighing whether to remove CEO Jensen Huang.

● The report has not been independently confirmed.

● No board decision has been announced.

Twenty-four hours after a chip-fueled rally swept through Asia, the region's markets gave back ground. Thursday's session followed Wednesday evening US-time reports that Nvidia (NASDAQ:NVDA)'s board was weighing whether to remove CEO Jensen Huang, a report that has not been independently confirmed and on which no board decision had been announced as of early Thursday.

The selling was widespread but uneven, with technology-heavy and China-exposed indexes faring worst. 12.

Index by index

Hong Kong was the epicenter. The Hang Seng index fell between 1.26% and 1.43%, depending on the snapshot, and the Hang Seng Tech index dropped 2.36%. Alibaba (NYSE:BABA) sank more than 6% to 7% amid reports, which have not been verified, that it accessed Nvidia computing power through a company called Megaspeed. Chinese AI developers MiniMax and Z.AI also declined.

In mainland China, the Shanghai Composite slipped 0.67%, the Shenzhen Component fell 1.64% and the CSI 300 lost 0.78%. Japan's picture was mixed: the Nikkei 225 fell 0.70%, while the broader Topix edged up 0.20%, suggesting the pressure was concentrated in large technology names that weigh heavily on the Nikkei. South Korea's Kospi slipped 0.61%, with memory makers Samsung Electronics and SK Hynix both lower.

Giving back Wednesday's gains

Context matters here. Asian chip stocks had surged on Wednesday, Nov. 11, when Taiwan's Taiex rose 3.62%, the Kospi gained 2.60% and the Nikkei climbed 1.31%. On Wall Street that day, the PHLX Semiconductor index jumped 5.7% with every component higher, and Nvidia itself rose 2.87%.

Thursday's declines were modest compared with those gains in Japan and Korea. In other words, Asia trimmed rather than reversed its rally, at least outside Hong Kong. That reading is based on the index figures, not on any analyst's characterization.

The more severe moves in Chinese markets likely reflect a second layer of concern beyond Nvidia's leadership: the reported intelligence angle. Nvidia's board has been examining Huang's ties to a woman whom US intelligence reportedly believes is a Chinese spy, and the board has said it had no reason to believe national security or company secrets were compromised. Reports said that Chinese authorities urged the US not to use the allegations to justify further export restrictions.

What it means for the US open and what to watch

The Asian session set the tone for US futures. At about 5:26 a.m. ET, Nasdaq-100 futures were down 0.63% and S&P 500 futures 0.31%, while Dow futures rose 0.09%. Nvidia was down roughly 6% to 7% premarket after an after-hours drop of about 8% to 8.6%. US-listed shares of SK Hynix fell about 3.2% and Micron (NASDAQ:MU) about 2.7%, a sign that Asian memory weakness was transmitting directly. Alibaba's US shares were down about 5.7%.

Europe offered a contrast, with London's FTSE 100 up about 0.34% near 10,872, suggesting the selloff was concentrated in markets with heavy exposure to the AI hardware Supply chain.

The counter-argument to reading too much into Asia's move is that it came after a powerful rally and on unconfirmed reports; a clear board decision, either way, could reduce uncertainty. The bearish view is that a Leadership change at Nvidia, combined with any tightening of US-China chip policy, would weigh on the entire Asian semiconductor supply chain.

Key markers ahead include any announcement from Nvidia's board, Nvidia's fiscal third-quarter results on Nov. 17 after the US bell, and Alibaba's Earnings on Nov. 19. Tencent reports next week. In the US on Thursday, Applied Materials (NASDAQ:AMAT) and Cisco (NASDAQ:CSCO) report after the bell, both with significant Asian supply chain and customer exposure.