Tech stocks tumble as data centre debt worries hit AI trades
SPY•Asian tech stocks fell sharply as investors reassessed the cost of financing AI infrastructure amid high interest rates; MSCI Asia-Pacific shares outside Japan dropped 3.4%, while South Korea’s KOSPI plunged more than 8%. U.S. Treasury yields fell, and traders priced a 75% chance the Fed would hold rates at its October 28 meeting.
1. Asian tech shares slide
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 3.4% for a fourth straight day of losses, led by a more than 8% plunge in South Korea’s KOSPI. Japan’s Nikkei 225 fell 5.4%. The selloff followed three days of declines on Wall Street after U.S. inflation accelerated more than expected in September.
2. AI financing concerns
Oracle, CoreWeave and other AI stocks sensitive to borrowing costs fell, while credit default swaps widened for Oracle, SoftBank and CoreWeave. Taiwan Semiconductor Manufacturing Company shares lost 2%, though the company reported a 69% increase in third-quarter net profit to a record T$763.1 billion, beating market forecasts.
3. Bonds rally as rate bets shift
The U.S. 10-year Treasury yield fell 8.2 basis points to 5.106% as investors bought government bonds. Fed funds futures showed a 75% implied probability that the central bank would hold rates at the end of its October 28 meeting. The Australian dollar slipped 0.3% after September employment fell by 39,300 jobs.
