Chip rout moves into panic territory
SOXX•Chip rout deepens ahead of Big Tech earnings
Blockbuster earnings from chipmaker SK Hynix 000660.KS did little to quell investor fear about AI risk as a rout in chip stocks deepened, setting the stage for results from Big Tech firms this week.
SK Hynix's April-June operating profit soared more than sixfold (that's 557% if you prefer percentages) yet still managed to miss analysts' lofty estimates — a miss that coincided with investors fretting about the sustainability of AI spending and long-term returns from booming in chip demand.
Earnings from the "Magnificent Seven" members Microsoft MSFT.O and Meta META.O later in the day will be a key test of the AI trade that has shaped the global markets.
Alphabet GOOGL.O and Tesla TSLA.O spooked investors last week with negative cash flow reports, highlighting the tug of war between the need to spend a lot to build AI infrastructure and the need for steady cash flow and profitability.
South Korea's KOSPI .KS11 dropped 12%, triggering an increasingly common 20-minute trading halt, and carrying on from a 10% slump in the previous trading session.
The index, which rocketed in the first half of the year due to AI frenzy, is still the world's best performer this year but is staring at a 35% decline in July, its worst monthly performance.
Oil jumps as Middle East tensions and Fed decision loom
Elsewhere, oil prices jumped after U.S. Central Command reported the interception of Iranian ballistic missiles, shattering the sense of calm in markets that had lasted the past few days.
