Global financial markets are experiencing a broad sell-off today, led by technology and semiconductor companies, after US inflation rose more than expected, reviving fears of continued monetary policy tightening and the rising cost of financing massive investments in artificial intelligence.
In contrast, gold prices rose as US bond yields declined, while oil prices fell despite ongoing military tensions in the Middle East.
First: Asian markets record sharp losses
Japan's Nikkei index: 64,425.95 points (-4.90%)
Korea's Kospi index: Declined by approximately 8%
Shanghai Composite Index: 3,707.48 points (−1.59%)
Hang Seng Index: 24,062.72 points (−1.03%)
Losses were more severe in semiconductor companies, with Samsung shares falling by about 10%, SK Hynix declining by more than 11%, while Taiwan's TSMC shares fell by about 2% despite announcing record profits.
This indicates that markets no longer value AI companies based solely on profit growth, but have become more sensitive to the cost of capital, debt, and high valuations.
Second: US inflation revives concerns about raising interest rates
Annual inflation for September: 3.7% vs. expectations of 3.6%.
Annual core inflation: 2.6% vs. expectations of 2.5%.
The data released yesterday has heightened concerns that the Federal Reserve may have to keep interest rates high for longer, or even resume raising them if inflationary pressures persist.
Nevertheless, today's futures pricing indicates a near 75% probability of interest rates being held steady at the October 28 meeting, reflecting continued uncertainty about the monetary policy path.
Third: Wall Street continues to face pressure
Nasdaq Composite: 26,692.87 points (−1.88%)
S&P 500: 7,718.94 points (−1.11%)
Dow Jones: 51,621.48 points (−0.09%)
Russell 2000: 2,729.53 points (−1.93%)
Today's Nasdaq futures point to a further decline of nearly 1.3%, suggesting continued pressure during the US session.
The funding crisis is particularly evident in AI infrastructure companies, especially after CoreWeave's stock fell by about 15% yesterday, coinciding with the rising cost of insuring against defaults on the debts of some companies linked to the sector.
These developments reflect growing concerns about companies' ability to finance their massive investments and generate sufficient returns to justify their high market valuations.
Fourth: Gold rises and oil falls
Gold: $4,178 per ounce (+1.7%)
Silver: $56.85 per ounce (+1.7%)
Brent crude: $104.05 per barrel (−1.9%)
Dollar Index DXY: 102.01 points (−0.5%)
Oil prices fell after reports that the United States was considering easing restrictions on some Russian oil tankers, which could help alleviate supply and transportation pressures.
But geopolitical risks remain high, especially with attacks on ships near the Strait of Hormuz and continued Ukrainian strikes on Russian oil infrastructure.
As for gold, it benefited from the decline in US bond yields and the weakness of the dollar, along with increased demand for safe assets amid the turmoil in stock markets.
Fifth: Key European Developments
European markets showed mixed performance, with some defensive sectors benefiting from lower energy prices and bond yields, while technology companies remained under pressure.
German DAX index: 25,175 points (-0.49%)
The UK's FTSE 100 index: 10,809 points (+0.78%)
French CAC 40 index: 7,895 points (+0.28%)
This disparity reflects the varying sensitivity of European sectors to inflation and financing costs, with continued pressure on technology-related and capital-intensive investment companies.
Summary and Analysis
The most important shift in the markets today is not just the rise in US inflation, but the shift in concerns to the ability of AI companies to finance their investments and achieve expected returns in a high interest rate environment.
Three main risks stand out:
1. Continued inflationary pressures: This could prompt the Federal Reserve to maintain its tight monetary policy for a longer period.
2. Re-evaluating technology stocks: especially companies with high multiples and a high reliance on external financing.
3. Geopolitical risks: Any new escalation in the Middle East could push oil prices up again and bring inflationary pressures back to the forefront.
The most important question in the coming sessions remains: Will the sell-off remain confined to technology and artificial intelligence stocks, or will it expand to include the rest of the US market sectors?
Note: Prices and data are from the report provided and have not been independently verified. Thursday's prices are recorded during the session and are not necessarily closing prices.
