World stocks hit one-month low as chip rout worsens

Brent crude futures extended Monday's nearly 9% plunge, falling 1.87% to $86.71 a barrel, as a lull in hostilities between the U.S. and Iran followed Washington's abrupt suspension of air strikes on Saturday. President Donald Trump said on Monday the United States was having "good talks" with Iran and there was a chance of a deal. The yield on benchmark U.S. 10-year notes US10YT=RR fell 2.87 basis points to 4.612%, from 4.641% late on Monday. Markets have priced about a 32% chance that the Federal Reserve hikes by 25 basis points on Wednesday. 0#USDIRPR "Higher oil prices driven by Middle East tensions have increased inflation risks and strengthened the case for a rate hike, but we think more evidence is needed to win majority support," Oscar Munoz, head of U.S. economics at TD Securities, wrote in a note. Against the dollar, the euro EUR= edged up 0.05% to $1.1373. The Japanese yen JPY= weakened 0.05% to 163.83 per dollar, barely above a four-decade low, with markets on edge about Japan intervening in the currency pair - particularly if the Bank of Japan leaves rates on hold this week and sets off another yen slide. World stocks fell to a one-month low on Tuesday, as investors dumped chipmakers across the globe on concerns about Chinese competition and funding of the AI boom, while the possibility of a U.S. interest rate hike as early as this week further dampened the mood. The tech-heavy Nasdaq Composite .IXIC fell 1.37% on Tuesday and chip majors weakened, with Micron MU.O sliding 11.7%, Nvidia NVDA.O dropping 1.7% and Intel INTC.O shedding 8.5%. Asian chipmakers were at the heart of Tuesday's selloff, with South Korea's KOSPI .KS11 diving more than 10% to a three-month low, triggering a circuit breaker on the way down as it heads for its largest monthly fall on record, surpassing declines suffered during the Asian financial crisis in 1997. The index had more than tripled in value over the 12 months to June, but it has shed more than a third of its value since that peak. Shares in memory chipmakers SK Hynix 000660.KS and Samsung Electronics 005930.KS, which are under extra pressure in a market transformed by leverage, shed more than 12% as their stratospheric rally unwinds in a hurry. The MSCI All Country World Price index .MIWD00000PUS fell 0.76% to its lowest since June 26. After a stellar rally this year, AI-linked stocks have been met with several bouts of selling in recent weeks as investors worry about stretched valuations and circular funding in the sector. The latest rout came after a report that China had begun manufacturing domestically developed immersion deep ultraviolet (DUV) lithography machines, while Chinese chipmaker CXMT's strong stock-market debut on Monday fuelled concerns about increased competition in the memory chip industry. "You've seen the companies paying for AI, the hyperscalers, not really participating because of concerns about the cost and the degree of leverage that needs to be taken on. And now we're seeing questions over the profitability of the semiconductor space, particularly in Asia," said Dorian Carrell, head of multi-asset income at Schroders. "The broader AI story has some way to go, but these kinds of (profit) growth rates are rarely sustained. We think that it's healthy that the market's questioning these things." Some positive earnings reports from companies including Unilever ULVR.L and Mercedes-Benz MBGn.DE, nonetheless helped European stocks outperform. Earnings this week from "Magnificent Seven" members Microsoft MSFT.O, Amazon.com AMZN.O, Meta META.O and Apple AAPL.O, also among companies that splurge the most on AI, will be seen as a key test of the market rally, particularly after Alphabet GOOGL.O and Tesla TSLA.O spooked investors last week with negative cash flow reports.

World stocks hit one-month low as chip rout worsens

Oil, rates and currencies add to caution

World stocks fall as chipmakers sell off

AI-linked stocks and earnings stay in focus

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