Unexpectedly strong US inflation data, combined with growing concerns over an AI valuation bubble, has delivered a fresh shockwave to global technology stocks. Asia-Pacific markets opened broadly lower on Thursday, with South Korean equities suffering particularly heavy losses, forcing the exchange to trigger circuit breaker mechanisms.
On Thursday, South Korea's benchmark index plunged more than 6% at the open, activating the exchange's circuit breaker. The Korea Exchange successively triggered Sidecar mechanisms on both KOSPI and KOSDAQ, halting program selling. Samsung Electronics and SK hynix both fell sharply.
The Nikkei 225 index dropped more than 3%, with SoftBank plunging over 8% and Kioxia falling more than 8%. The MSCI Asia-Pacific index declined over 1% to around 266 points, marking its fourth consecutive trading day of losses. Nasdaq 100 futures extended losses by approximately 1% during Asian trading hours.
Chip Stock Selloff Spreads Across Asia-Pacific, South Korea Triggers Circuit Breaker
After Asia-Pacific markets opened, panic sentiment spread rapidly. Growth sectors represented by semiconductors, optical communications, and AI hardware infrastructure experienced collective sharp pullbacks.
The MSCI Asia-Pacific index briefly widened its decline to 1%, reaching 266.28 points, its fourth straight day of losses. South Korea's market saw the steepest drop. The Seoul Composite Index opened 5.6% lower before extending losses, hitting a maximum decline of 6%.
Samsung Electronics and SK hynix fell more than 6% and 9% respectively. The Korea Exchange successively activated Sidecar mechanisms on the KOSPI and KOSDAQ indices, suspending program selling to ease abnormal market volatility.
Japan's market also fell sharply. The Nikkei 225 index dropped over 3% during intraday trading, while the TOPIX index fell as much as 2%.
Among individual stocks, advanced chip packaging substrate giant IBIDEN plunged 10.27%; semiconductor silicon wafer manufacturer SUMCO tumbled 9.53%; EUV inspection equipment unicorn LASERTEC and memory chip giant Kioxia dropped 8.64% and 8.48% respectively. Meanwhile, the previously popular data center cable duo also suffered steep declines, with Fujikura and Furukawa Electric falling sharply by 9.02% and 8.37% respectively. Tech investment giant SoftBank Group dropped 7.62%, while upstream resources and electronic materials representative Sumitomo Metal Mining also closed down 7.13%.
Australia's S&P/ASX 200 index fell 0.8%. Nasdaq 100 index futures widened losses to 1%, while Hang Seng futures dropped 1.1%.
Inflation Data Revives Rate Hike Expectations
According to Wall Street Insights, US September CPI rose 3.7% year-on-year, while core CPI climbed to 2.6%, both exceeding expectations, with energy and service prices jointly driving inflation higher. Following the data release, market bets on a Federal Reserve rate hike in October briefly rose to 50%, while the probability of a December rate hike briefly surged above 95%.
Lazard Chief Market Strategist Ronald Temple stated:
Today's CPI report shows that inflationary pressures are spreading, and the risk of the Federal Reserve falling behind the curve is increasingly rising.
Skyler Weinand of Regan Capital commented:
Inflation is stubborn and moving in the wrong direction, and this could not be clearer. We expect the Federal Reserve to pause rate hikes in October, but anticipate it will restart its rate hike cycle in December.
The 10-year Treasury yield fell 2 basis points overnight during New York trading to 5.19%, and further declined 5 basis points during Thursday's Asian session to 5.137%.
Japan's 10-year government bond yield simultaneously fell 5 basis points to around 2.945%, while Australia's 10-year yield dropped 3 basis points to 5.28%.
Dollar Weakens, Gold Prices Decline for Fourth Consecutive Day
In currency markets, the US dollar softened during Thursday's Asia-Pacific session, giving back some of its overnight gains. The dollar index fell 0.3%, the euro rose to 1.1195, and the yen strengthened slightly to 157.94 per dollar.
In commodities, spot gold prices quickly rebounded 0.87% to around $4,141 per ounce, though it had previously fallen for four consecutive days and briefly touched around $4,100 overnight.
WTI crude oil traded at $94.70 per barrel, edging down 0.55%.
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