Asian stocks sell off as AI trades crumble after hot US inflation data
SPY•Asian stocks fell sharply as hotter-than-expected US inflation raised expectations of Federal Reserve rate hikes, with MSCI Asia-Pacific shares outside Japan down 3.3% and South Korea’s KOSPI plunging 8%. US 10-year Treasury yields fell 7.8 basis points to 5.110%, while traders priced a 75% chance the Fed will hold rates at its October 28 meeting.
1. Technology shares lead declines
Stocks sold off across Asia on Thursday, with technology shares and the supply chain bearing the brunt after US consumer price inflation accelerated more than expected in September. The MSCI index of Asia-Pacific shares outside Japan fell 3.3%, South Korea’s KOSPI dropped 8%, and the Nikkei 225 fell 4.8%; S&P 500 e-mini futures were down 0.5%.
2. AI stocks under pressure
Taiwan Semiconductor Manufacturing Company fell 2%, Samsung Electronics plunged 9.3%, and SK Hynix and Kioxia Holdings each dropped more than 11%. In the United States, the S&P 500 fell 1.1%, the Nasdaq Composite lost 1.9%, and semiconductor shares extended losses into a sixth day. Analysts cited financing risks, IPO timelines and higher borrowing costs as pressures on AI-related stocks.
3. Rate expectations shift
The US 10-year Treasury yield fell 7.8 basis points to 5.110% as investors bought government bonds. Traders were pricing a 75% probability that the Fed would hold rates at its October 28 meeting, while the Australian dollar slipped 0.2% after employment fell by 39,300 jobs in September.
