Introduction: AI-linked Asian stocks slump after slowdown call<\/p>\n
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n
Investors are reassessing the value of companies driving the artificial intelligence revolution after several leading AI figures called for a slowdown in development for safety reasons.<\/p>\n
Shares in AI-linked companies in Asia dropped when trading began today, dragging South Korea\u2019s KOSPI index down by 3.7%. Chipmaker SK Hynix has slumped by 5.75%<\/p>\n
SoftBank, a major AI invester, fell by as much as 13% in Tokyo after OpenAI\u2019s chief executive officer Sam Altman said that the ChatGPT-maker won\u2019t go public this year (SoftBank owns a stake in OpenAI).<\/p>\n
Taipei\u2019s Taiwan Semiconductor Manufacturing Company dropped by 1.2%.<\/p>\n
Traders\u2019 optimism about AI has taken a hit after the CEO of Anthropic, Dario Amodei, appealed for the AI industry to \u201cslow down\u201d \u2013 a call which was quickly backed by both Altman and Elon Musk.<\/p>\n
Amodei said \u201cbuilding [AI] too fast is reckless\u201d, and warned that a swarm of AI agents could cause hundreds of billions of dollars of damage by \u201ctaking over the entire internet\u201d in future.<\/p>\n
Although Amodie\u2019s claims have been disputed by some AI experts<\/a>, investors are pricing in a slowdown to AI development which would make it harder for the industry to pay for its rapid rollout of data centres.<\/p>\n Ipek Ozkardeskaya, senior analyst at Swissquote, says there is a \u201csour mood in the markets this morning\u201d, explaining:<\/p>\n double quotation markSo if the AI race slows materially, the key question becomes: who pays for all that infrastructure? The leases, debt and power commitments remain even if expected compute demand and revenue growth slow. And that could bring credit risk increasingly into the AI story, particularly for highly leveraged data-centre operators and lenders exposed to projects built on aggressive assumptions about future AI demand, at a time when interest rates \u2013 hence borrowing costs \u2013 are expected to rise.<\/p>\n What\u2019s interesting is that the slowdown may come not because Big Tech is out of cash, or because investors won\u2019t play along. It comes from the actual people who develop these models.<\/p>\n The agenda<\/p>\n 11.30am BST: India\u2019s inflation report for August<\/p>\n 1.30pm BST: Canada\u2019s inflation report for August<\/p>\n 4.15pm BST: ECB president Christine Lagarde gives speech in Vienna, Austria<\/p>\n Share<\/a><\/p>\n Updated at\u00a002.09 EDT<\/p>\n Key events<\/p>\n The UK government has welcomed the discussion among leading AI companies about safety, and the risks the technology poses to the future of humanity.<\/p>\n Andy Burnham\u2019s spokesperson told reporters:<\/p>\n double quotation mark\u201cIt\u2019s a good thing that the companies developing the most advanced AI systems are now talking openly about the risks as well as the opportunities.\u201d<\/p>\n Share<\/a><\/p>\n European commission spokesperson Thomas Regnier has told reporters that the EU is in favour of developing innovation in artificial intelligence, but companies have to prove their services are safe for citizens to operate in the bloc.<\/p>\n Share<\/a><\/p>\n US stocks exposed to the AI boom are set to drop when trading begins in two hours.<\/p>\n Chip stocks could be worst hit. In pre-market trading, Intel\u2019s stock is down 5.9% while Micron is on track for a 5.5% fall.<\/p>\n SpaceX, which owns the Grok AI assistant, is down 2.1% in pre-market trading.<\/p>\n Share<\/a>RAC: Fuel hits new Iran war high<\/p>\n Motor fuel prices across the UK have hit their highest level since the Iran war began, according to motoring body the RAC.<\/p>\n This follows the recent rise in oil prices, which are being passed onto customers through higher prices at the pumps.<\/p>\n RAC head of policy Simon Williams explains:<\/p>\n double quotation mark\u201cFuel prices hit new Iran War highs on Monday with petrol climbing 169.68p and diesel hitting 191.68p, surpassing Sunday\u2019s petrol high of 169.52p and the diesel high of 191.54p set on 15 April. This takes the cost of filling up a 55-litre family car with unleaded to over \u00a393 and diesel to more than \u00a3105.<\/p>\n \u201cBoth fuels are now at prices last seen in early August 2022, just a few months after the start of the Ukraine War, following price rises of 8p a litre since the start of September. And with oil well over $100 a barrel, there\u2019s no end in sight to high pump prices and the pain it brings to drivers who depend on their vehicles. In fact, the average price of diesel may be on the way to overtaking the record high of 199.05p set on 25 June 2022. Petrol, however, is still a long way from its all-time record of 191.53p on 3 July 2022.\u201d<\/p>\n Share<\/a><\/p>\n Here\u2019s a breakdown of the parts of the AI value chain that are vulnerable to a slowdown, from Charu Chanana, chief investment strategist at Saxo:<\/p>\n AI model developers: Launches may take longer, while spending on safety and testing rises.<\/p>\n Advanced processors: Near-term orders may remain supported, but future demand could soften if companies run fewer large training programmes.<\/p>\n Memory chips: This is one of the more vulnerable areas. Manufacturers are adding supply to meet very strong demand forecasts. If demand is delayed just as new production arrives, shortages could turn into excess supply and weaker prices.<\/p>\n Data centres, power and cooling: Projects already underway provide near-term support. The risk would rise if major technology companies began cancelling future projects.<\/p>\n AI use and adoption: Companies can continue using models that already exist. Demand for computing power to run those models\u2014often called inference\u2014may therefore remain strong.<\/p>\n Cybersecurity and AI monitoring: These areas could attract more investment as companies spend more on independent testing, system controls and protection against misuse.<\/p>\n Business software: The next winners may be companies that use AI to deliver clear productivity gains, rather than those simply spending the most on building larger models.<\/p>\n Share<\/a>China: AI warnings are ‘fearmongering’<\/p>\n China\u2018s Ministry of Foreign Affairs has criticised the call from the head of Anthropic for a global slowdown on AI development.<\/p>\n Ministry spokesperson Guo Jiakun told a press conference:<\/p>\n double quotation mark\u201cFearmongering, confrontation and vicious competition will only disrupt the process of global AI governance which serves no one\u2019s interest.\u201d<\/p>\n In another sign of Beijing\u2019s position, China\u2019s state security minister Chen Yixin wrote in a government outlet on Sunday that advanced U.S. models such as Anthropic\u2019s Mythos and OpenAI\u2019s GPT-5.5-Cyber could pose serious risks to China\u2019s critical information \u200binfrastructure, and called for a comprehensive strengthening of AI security.<\/p>\n Share<\/a><\/p>\n Updated at\u00a008.34 EDT<\/p>\n UK gilt yields pushed to new highs by rising oil price<\/p>\n UK government borrowing costs are hitting new multi-year highs this morning, as the rising oil pride fuels inflation worries.<\/p>\n Reuters has the details:<\/p>\n The 30-year gilt yield touched its highest level since March 1998 according to LSEG data at 5.951% and last stood 2 basis points up on the day.<\/p>\n The 5-year yield rose to its highest since July 2008 and was up 6 basis points on the day.<\/p>\n These moves are bad news for chancellor John Healey, as they eat into his fiscal headroom \u2013 the cushion that helps the government meet its borrowing rules.<\/p>\n Share<\/a><\/p>\n The dollar is strengthening this morning, as traders anticipate a hike in US interest rates later this week.<\/p>\n The US currency is up almost 0.5% against basket of rivals, knocking the euro down to a one-month low of $1.154.<\/p>\n The pound has slipped by 0.3% to $1.348.<\/p>\n Share<\/a><\/p>\n Concerns that AI might be getting out of hand are worrying investors, confirms Saxo UK investor strategist Neil Wilson.<\/p>\n He writes:<\/p>\n double quotation markWill AI kill humanity? I couldn\u2019t tell you but there seems to be sufficient alarm among those working on frontier models to worry investors. AI stocks fell Monday as leaders of the world\u2019s biggest AI platforms are calling for a slowdown in the development of their most advanced models on mounting concerns that it\u2019s all getting out of hand.<\/p>\n Anthropic CEO Dario Amodei published an essay over the weekend calling for a coordinated slowdown and safeguards. Elon Musk and Sam Altman agreed. This seems to have been prompted warnings from researchers, notably the resignation of Anthropic researcher Jacob Coxon. Meanwhile, there are rumours Google might have made a breakthrough with recursive self-improvement, a process where AI systems enhance their own code and capabilities with little human help.<\/p>\n Whilst President Donald Trump is dismissive of the dangers posed, you get a sense that we may be at a turning point for the frontier development of AI. The problem is China. \u201cLook, we\u2019re leading China in AI… and, frankly I want to keep it that way because whoever wins AI, wins,\u201d said Trump<\/p>\n Share<\/a>European tech stocks hit six-week low<\/p>\n Europe\u2019s technology sector has hit a six-week low this morning, as traders react to calls from the AI industry for a slowdown<\/a>.<\/p>\n The Stoxx Europe 600 Technology index has dropped by 2.3% so far today, to its lowest since 31 July, after Anthropic\u2019s CEO called for the AI industry to \u201cslow down\u201d for safety reasons.<\/p>\n Soitec, the French semiconductor materials company, has dropped by 12.8% and is leading the sell-off, followed by Germany\u2019s Aixtron (-9.3%), whose systems are used to make microchips.<\/p>\n Semiconductor manufacturer Infinion are down 7.45%.<\/p>\n Russ Mould, investment director at AJ Bell, says fears about AI becoming too powerful are now hurting the tech sector:<\/p>\n double quotation markPreviously a hot investment area with investors clambering to own any stock linked to the AI boom, now it looks like AI\u2019s strengths could backfire. There are growing fears that AI is advancing at an extraordinary pace and there need to be greater safeguards and controls in place.<\/p>\n \u201cFutures prices imply that tech stocks are set for a bad day on the market. The tech-heavy Nasdaq index is expected to fall 1.4% when it opens for trading on Monday. In the UK, FTSE 100 tech fund Polar Capital Technology Trust was one of the biggest fallers in the blue-chip index.<\/p>\n \u201cAn AI-related sell-off doesn\u2019t create the best backdrop for Anthropic\u2019s planned IPO, which is already rumoured to be delayed by a month to November.\u201d<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.06 EDT<\/p>\n Full story: AI-linked stocks fall after tech bosses call for slowdown in \u2018reckless\u2019 development<\/p>\n Here\u2019s our news story on the drop in AI company share prices today:<\/p>\n Share<\/a>AirBaltic files for Chapter 11 bankruptcy protection to cut debts<\/p>\n The high price of oil has pushed Latvian airline airBaltic to seek bankrupty protection.<\/p>\n AirBaltic filed for Chapter 11 bankruptcy protection in New York this morning, as it tries to restructure its hefty debts.<\/p>\n AirBaltic, which is majority owned by the Latvian government, said it was using Chapter 11 to restructure its finances and raise capital while continuing day-to-day operations.<\/p>\n The process will not affect passengers and operations will continue as normal, airBaltic says.<\/p>\n Andrejs Martinovs, chairman of the supervisory board of airBaltic, says the airline hopes to create a \u201cfinancially stronger airBaltic\u201d with lower debts, explaining:<\/p>\n double quotation mark\u201cWe have carefully assessed the restructuring options available to the company, with one priority in focus \u2013 to give airBaltic the best possible basis to continue operating and to build a sustainable financial structure.<\/p>\n Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders. At the same time, it allows the company to continue operating<\/p>\n Share<\/a><\/p>\n Oil is rising too \u2013 with Brent crude up 2.8% to $107.50 this morning.<\/p>\n Traders are anticipating further disruption to energy supplies from the Gulf, after Saudi Arabia\u2019s major pipeline to the Red Sea (avoiding the strait of Hormuz) was attacked by drones last week.<\/p>\n Share<\/a>UK gas prices highest in close to four years<\/p>\n There\u2019s also turbulence in the energy markets again this morning, as the Middle East conflict continues to rage.<\/p>\n European gas prices have jumped by over 5% in early trading, pushing the month-ahead UK gas contract up to 209.50p per therm, its highest since late December 2022.<\/p>\n