Asian stocks fell sharply as concerns about AI financing intensified, but US and European trading steadied: the Nasdaq rose 0.1%, the S&P 500 gained 0.3% and the Dow added 1%. US 10-year Treasury yields fell 10 basis points to 5.08%, despite hotter-than-expected producer inflation.
The AI-related equity rout deepened in Asia on Thursday, with South Korea's KOSPI down 7.5% and Japan's Nikkei falling 5%. The selloff lost momentum in Europe and the United States, where the Nasdaq rose 0.1%, the S&P 500 gained 0.3% and the Dow climbed 1% to its highest level in a month.
The KOSPI has lost 20% in barely a week, while CoreWeave bonds due in 2032 fell below 80 cents on the dollar and the cost of insuring against defaults by major US AI companies reached record levels. The article said AI investment is increasingly financed by debt, private credit and off-balance-sheet borrowing, while warning that selling and credit downgrades could reinforce one another.
US Treasuries had one of their best days of the year, with yields on 10-year and longer maturities falling. The 10-year yield dropped 10 basis points to 5.08% even as US producer inflation rose more than expected and WTI crude gained 3%.
