By Marc Jones and Gregor Stuart Hunter <\/p>\n
LONDON\/SINGAPORE, Oct 15 (Reuters) – A sharp selloff in Asian tech stocks sent a chill through global equity markets on Thursday, as crowded bets on data centres and other key AI plays faced a reckoning from high and rising interest rates. <\/p>\n
European trading brought something of a stabilisation [.EU] with stocks there \u200cdown less than 0.3% early on. <\/p>\n
It was partly due to the region’s comparatively smaller tech sector, but also as a drop in government bond yields and a dip in \u200cprice of oil and gas helped ease some recent strains. <\/p>\n
Asian moves had been far more extreme. <\/p>\n
South Korea’s KOSPI index, whose flock of top chipmakers made it one of the main beneficiaries of AI euphoria, plunged almost 8% in its seventh \u200bconsecutive drop, while the Nikkei 225 fell 5% to make it six-in-row for Tokyo too. [.T] <\/p>\n
“The selloff in Asia looks less like a sudden deterioration in technology fundamentals and more like a repricing of the cost of capital,” said Charu Chanana, chief investment strategist at Saxo Bank in Singapore. <\/p>\n
“Investors are not questioning whether AI demand exists,” she said. “They are increasingly questioning what price they should pay for that growth when interest rates are high, volatile and potentially moving higher again.” <\/p>\n
The lure of safety lifted gold 1% in London while German Bund yields, which move inversely to price, hit a more than one-month low as both French and \u200cUK yields also eased. [GVD\/EUR] <\/p>\n
Wall Street futures pointed to the stock market \u2060turbulence continuing, though. The main US stock markets [.N] logged a third straight fall on Wednesday after US consumer price inflation accelerated by more than expected in September. <\/p>\n
The S&P 500, which hit its latest record high only last week, fell 1.1%, the Nasdaq Composite tumbled 1.9% and a gauge of semiconductor stocks extended \u2060losses into a sixth day. <\/p>\n
That resulted from the prospect of higher interest rates pummelling shares of Oracle, CoreWeave and other AI stocks sensitive to higher borrowing costs. <\/p>\n
“While the initial selloff was triggered by the hotter-than-expected CPI, tech was the main driver of today’s selloff,” JPMorgan analysts wrote in a note. <\/p>\n
“AI was again the main challenge … with financing risks and IPO timelines still at the centre of the story.” <\/p>\n
AI OF THE STORM <\/p>\n
Asia’s overnight troubles \u200bsaw \u200bTaiwan Semiconductor Manufacturing Company fall 2%, Samsung Electronics plunge 9.9%, memory chipmakers SK Hynix and Kioxia Holdings plummet \u200bmore than 11% each, and AI investor SoftBank Group lose more than 9%. <\/p>\n
The \u200ccost of insuring AI-linked tech giants against default has also increased, in some cases to records, with credit default swaps widening for cloud computing giant Oracle, AI investor SoftBank and data-centre operator CoreWeave. <\/p>\n
Some strategists found reasons for optimism, saying volumes were relatively light and October is typically a volatile time of year for markets. <\/p>\n
“I’m not worried, because stocks are not expensive, there is no sign of a recession, and demand still massively exceeds supply in most parts of the AI story,” said Mark Matthews, head of research for Asia at Bank Julius Baer in Singapore. <\/p>\n
Defying the gloom, AI chip giant TSMC posted a 69% jump in third-quarter net profit to a record T$763.1 billion ($23.59 billion) on Thursday, beating market forecasts. <\/p>\n
STRAIT TALKING <\/p>\n
The backdrop of investor anxiety drove safe-haven buying of government bonds, with the yield \u200con the US 10-year Treasury bond closing back in on 5% as it dropped 10 basis during Thursday’s \u200bAsian and European sessions. <\/p>\n
“We continue to think that yields at current levels offer decent value,” DBS analysts wrote in a \u200bnote. “We are not convinced that the Fed will have to deliver back-to-back hikes on the \u200bback of one set of CPI numbers.” <\/p>\n
Wednesday’s U.S. inflation data had once again tweaked expectations for the Fed’s rate path, with traders briefly pricing in roughly \u200ceven odds of a hike this month before scaling back those bets. <\/p>\n
Fed \u200bfunds futures are now pricing an implied 75% probability \u200bthe US central bank will stay on hold at the end of its next two-day meet on October 28, little changed from the start of the week, according to the CME Group’s FedWatch tool. <\/p>\n
In the foreign exchange markets, the dollar slipped from an 18-month peak. Against the yen it was down 0.4% at 157.725 yen, while the euro was up \u200b0.6% at $1.12 and sterling was 0.5% higher and buying $1.32. <\/p>\n
The Australian dollar declined \u200c0.3% to $0.6954 after employment unexpectedly decreased by 39,300 jobs in September, against expectations of an increase of 20,000. <\/p>\n
Investor attention now turns to US producer prices and retail sales \u200bdata due for release on Thursday. <\/p>\n
In oil markets, Brent crude was down 2% at $103.8 a barrel as traders weighed up the effects of US sanctions relief on \u200bsupply against attacks on shipping through the Strait of Hormuz. <\/p>\n
(Reporting by Marc Jones; Editing by Clarence Fernandez) <\/p>\n","protected":false},"excerpt":{"rendered":"By Marc Jones and Gregor Stuart Hunter LONDON\/SINGAPORE, Oct 15 (Reuters) – A sharp selloff in Asian tech…\n","protected":false},"author":2,"featured_media":933775,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[15261,45,161,49,48,46,133,1828,1829,74172,1830,1831,39783,8123,131,2519,968,1705,2511,1832,1833,176,74173,3322,74174],"class_list":["post-933774","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-401k","tag-business","tag-business-news","tag-ca","tag-canada","tag-economy","tag-finance","tag-financial-information","tag-investing","tag-investment-tools","tag-investor","tag-market-news","tag-mortgage","tag-mutual-funds","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-track-portfolio"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/933774","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=933774"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/933774\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/933775"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=933774"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=933774"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=933774"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}