Stocks sold off in Asia on Thursday with the \u200ctech supply chain bearing the brunt of the damage, as a quicker-than-expected increase in US consumer price inflation upped expectations for the Federal Reserve to act later this year.<\/p>\n
MSCI\u2019s broadest index of Asia-Pacific shares outside Japan tumbled 3.3 per cent, \u200bled by a plunge of 8 per cent in South Korea\u2019s KOSPI, while the Nikkei 225 fell 4.8 per cent. S&P 500 e-mini futures were down 0.5 per cent.<\/p>\n
\u201cThe selloff in Asia looks less like a sudden deterioration in technology fundamentals and more like a repricing of the cost of capital,\u201d said Charu Chanana, chief investment strategist at Saxo Bank in Singapore. \u201cInvestors are not questioning whether AI demand exists,\u201d she said. \u201cThey are increasingly questioning what price they should pay for \u200bthat growth when interest rates are high, volatile and potentially moving higher again.\u201d<\/p>\n
Overnight, stocks on Wall Street logged their third day of declines after US consumer price inflation accelerated by more than expected in September.<\/p>\n
The S&P 500 \u2060fell 1.1 per cent, the Nasdaq Composite tumbled 1.9 per cent and a gauge of semiconductor stocks extended losses into a sixth day, as the prospect of higher interest rates pummelled shares \u200cof \u200cOracle, \u200bCoreWeave and other AI stocks sensitive to higher borrowing costs.<\/p>\n
\u201cWhile the initial selloff was triggered by the hotter-than-expected CPI, tech was the main driver of today\u2019s selloff,\u201d JPMorgan analysts wrote in a note. \u201cAI was again the main challenge … with financing risks and IPO timelines still at \u2060the centre of the story.\u201d<\/p>\n
Asian stocks in the tech hardware supply \u200bchain were hard hit on Thursday. Taiwan Semiconductor Manufacturing Company fell 2 per cent, Samsung Electronics plunged 9.3 per cent, \u200bmemory chipmakers SK Hynix and Kioxia Holdings plummeted more than 11 per cent each, and AI investor Softbank Group lost 9.4 per cent.<\/p>\n
Some strategists found reasons for optimism, noting that volumes were relatively light and October \u200cis typically a volatile time of year for markets.<\/p>\n
\u201cI\u2019m not worried, \u200bbecause stocks are not expensive, there is no sign of a recession, and demand still massively exceeds supply in most parts of the AI story,\u201d said Mark Matthews, \u2060head of research for Asia at Bank Julius Baer in Singapore.<\/p>\n
The backdrop \u2060of investor anxiety drove safe-haven buying of government \u200bbonds, with the yield on the US 10-year Treasury bond down 7.8 basis points at 5.110 per cent.<\/p>\n
\u201cWe continue to think that yields at current levels offer decent value,\u201d DBS analysts wrote in a note. \u201cWe are not convinced that the Fed will have to deliver back-to-back hikes on the back of one set of CPI numbers.\u201d<\/p>\n
The inflation data reshaped expectations for the Fed\u2019s rate path, with traders briefly pricing in roughly even odds of a hike later this month before scaling back those bets.<\/p>\n
Fed funds futures are now pricing an implied 75 per cent probability the US central bank will remain on hold at its next two-day meeting on October 28, little changed from a day earlier, according to the CME Group\u2019s FedWatch tool.<\/p>\n
\u201cThe upside surprise in US CPI and the subsequent rally in bonds is highly counterintuitive,\u201d \u200csaid Prashant Newnaha, senior rates strategist at \u2060TD Securities. \u201cThe cleanest read through is that the slump in AI is repricing growth expectations down, leading to bonds serving as a hedge for stocks.\u201d<\/p>\n
Against the yen, the US dollar was down 0.4 per cent at 157.74 yen, while the euro was up 0.6 per cent at $1.1225.<\/p>\n
The Australian dollar declined 0.2 per cent to $0.6956 after employment unexpectedly \u200cdecreased by 39,300 jobs in September, against expectations of an increase of 20,000.<\/p>\n
Investor attention turns to speeches from Fed officials speaking in Bangkok, including chair Kevin Warsh, for clues on the US central bank\u2019s next move, \u200bas well as US producer prices and retail sales data due for release later on Thursday. AI chip giant TSMC will \u200balso release earnings for the third quarter later in the Asian trading session.<\/p>\n
In oil markets, Brent crude was down 1.7 per cent at $104.20 a barrel as traders weighed up the effects of US sanctions relief on supply against attacks on shipping through the Strait of Hormuz. – Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"Stocks sold off in Asia on Thursday with the \u200ctech supply chain bearing the brunt of the damage,…\n","protected":false},"author":2,"featured_media":655356,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,218,219,61,60,6000,80],"class_list":["post-655355","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-ie","tag-ireland","tag-oil","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/655355","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=655355"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/655355\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/655356"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=655355"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=655355"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=655355"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}