Global markets are reeling from a sharp sell-off in AI-linked shares, driven by investor concerns over rising inflation and potential interest rate hikes. The sell-off has particularly impacted tech-heavy indices in Asia and the United States.
In South Korea, the Kospi 200 index, which is heavily weighted towards memory chip manufacturers, plummeted over 8% overnight, reaching a six-month low. Trading was intermittently halted due to circuit breakers being triggered. Notable declines included SK Hynix and Samsung Electronics, which fell nearly 11% and 9.5%, respectively.
Japan's Nikkei 225 also suffered, dropping 4.9% on Thursday. This decline was exacerbated by an 11% drop in memory chip maker Kioxia and a 10% fall in SoftBank, a major investor in OpenAI, the owner of ChatGPT.
The turmoil followed a downturn on Wall Street, where the Nasdaq Composite fell by 1.9% and the S&P 500 by 1.1%, marking their worst performances since July. This market anxiety was sparked by US inflation data showing a 3.7% rise in September, the fastest increase since May's 4.2% peak.
Investors are now bracing for potential interest rate hikes by the US Federal Reserve, with some anticipating an increase as early as the end of the month. Deutsche Bank analysts, led by Jim Reid, noted that the inflation figures were concerning as they indicated broad-based price increases beyond just energy costs.
The International Monetary Fund has also issued warnings about the potential global impact of an AI share price correction, highlighting the risk to financial stability worldwide. Asian markets, in particular, are seen as vulnerable, though the UK and eurozone might be somewhat shielded.
In China, the Shanghai CSI 300 index fell by as much as 2.4%. Taiwan's TSMC, a leading chip manufacturer and Asia's most valuable company, saw its shares drop 2% despite reporting its sixth consecutive quarter of profits.
European markets opened lower, with the Europe Stoxx 600 down 0.4%, the UK's FTSE 100 slipping 0.06%, France's CAC 40 declining 0.19%, and Spain's Ibex falling 0.17%. Germany's DAX experienced a 0.53% drop.
In the US, futures for tech stocks pointed to further losses, with Nasdaq 100 futures down 1%. The market's focus remains on how central banks will respond to the inflation data and the potential ripple effects on global financial markets.
