Global stock markets experienced renewed volatility this week as a sharp sell-off in artificial intelligence (AI)-related shares spread from Asia to the United States, compounded by rising concerns over inflation and potential interest rate increases. The downturn began in Asian markets and extended to Wall Street, reflecting investor unease over the sustainability of rapid AI-driven growth amid a challenging economic backdrop.
On Thursday, South Korea’s main index, the Kospi, plummeted more than 7.6 percent to 5,554.22, marking a steep decline from its record high above 9,000 reached in June. The benchmark has now fallen over 16 percent in the past month. Semiconductor giants experienced significant losses, with Samsung Electronics down nearly 9.5 percent and SK Hynix falling more than 11 percent. In fact, other reports indicated the Kospi 200 index dropped over 8 percent to a six-month low, triggering trading halts due to circuit breakers.
Japan’s Nikkei 225 declined 4.9 percent, weighed down by technology companies including SoftBank Group, which lost around 9.3 percent, and memory chip maker Kioxia, which dropped approximately 12.3 percent. Taiwan’s Taiex also fell 3.4 percent, with chipmaker TSMC retreating 2 percent ahead of its earnings announcement. Despite the broad sector weakness, TSMC reported record quarterly profits that exceeded expectations and reiterated strong demand for AI-related technologies.
The sell-off continued on Wall Street, where the Nasdaq Composite decreased around 1 percent in early trading, extending its losses to its sixth decline in seven sessions following a recent record high. The technology-heavy index led the downturn, with AI-focused companies like Nvidia, Broadcom, and Advanced Micro Devices falling between 3 and 6 percent. Meanwhile, the Dow Jones Industrial Average rose by 0.6 percent, supported by gains in non-technology sectors.
The moves came amid a stronger-than-anticipated rise in U.S. inflation, with consumer prices increasing 3.7 percent year-on-year in September, up from 3.4 percent in August. This acceleration exceeded economists’ forecasts and heightened expectations of further interest rate hikes by the U.S. Federal Reserve, triggering additional market nerves. Analysts pointed out that the inflation surge was broad-based across consumer goods rather than driven by energy prices, which underscores underlying price pressures.
European markets displayed a mixed response, with Britain’s FTSE 100 rising 0.5 percent after unexpectedly positive economic growth figures, France’s CAC 40 gaining 0.3 percent, and Germany’s DAX falling 0.3 percent. Oil prices also declined, with Brent crude dropping 2 percent to just under $104 per barrel. Currency markets saw the U.S. dollar weakening against the Japanese yen while the euro strengthened slightly.
The recent volatility has raised concerns among policymakers and market observers. The International Monetary Fund (IMF) warned that a sharp correction in AI stock valuations could have ripple effects across global financial markets, particularly impacting Asian economies that are heavily exposed to the semiconductor and technology sectors. While some European markets might be more insulated, investors with significant U.S. holdings could face spillover risks.
Overall, the current market turbulence reflects a combination of investor caution over the durability of AI-related growth, evolving inflation dynamics, and the possibility of tighter monetary policy, creating an environment of uncertainty across major global financial centers.