South Korean equities experienced a sharp decline in early trading on Friday, mirroring the overnight performance of US technology stocks.

The Korea Composite Stock Price Index (KOSPI) opened down 316.21 points, a drop of 3.66%, and has since extended losses to as much as 6%. Shares of Samsung Electronics Co Ltd and SK Hynix Inc both fell significantly. The smaller-cap Kosdaq index was down 2.41%.

In overnight US trading, the Dow Jones Industrial Average surged to a record high, while the Nasdaq Composite showed weakness. Investors appeared to be rotating out of technology shares and into non-tech stocks.

The Dow Jones Industrial Average rose 874.86 points, or 1.73%, closing at a historic peak of 51,561.93. The Nasdaq declined 0.09% to finish at 26,830.96, and the S&P 500 gained 0.41% to end the session at 7,584.31.

This rotation was triggered by a drop in shares of Broadcom (NASDAQ: AVGO), prompting investors to reduce holdings in artificial intelligence-related stocks. The chipmaker's shares fell more than 12% after reporting second-quarter revenue that missed expectations. Chip stocks, which had previously driven the market to record highs, were broadly lower. The VanEck Semiconductor ETF (SMH) fell over 1%, Arm Holdings PLC (NASDAQ: ARM) dropped more than 4%, and Micron Technology Inc (NASDAQ: MU) declined nearly 8%.

Concerns over the situation in the Middle East also weighed on equity markets. Recent conflicting signals from negotiations aimed at ending the conflict have unsettled global markets, leading to sharp increases in oil and gasoline prices.