Global Markets: Tech sell-off gathers pace as chipmakers hammered

Softbank

15/10/2026 09:59

CME FedWatch shows implied October 28 hike odds at 25%, hold at 75%
MSCI Asia-Pacific shares outside Japan fall 3.4%, led by KOSPI's more than 8% plunge
Australian dollar slips 0.3% after September employment falls by 39,300 jobs
Updates with early European moves
By Marc Jones and Gregor Stuart Hunter
LONDON/SINGAPORE, Oct 15 (Reuters) - A sharp selloff in Asian tech stocks sent a chill through global equity markets on Thursday, as crowded bets on data centres and other key AI plays faced a reckoning from high and rising interest rates.
     European trading brought something of a stabilisation .EU with stocks there down less than 0.3% early on.
It was partly due to the region's comparatively smaller tech sector, but also as a drop in government bond yields and a dip in price of oil LCOc1 and gas TRNLTTFMc1 helped ease some recent strains. 
Asian moves had been far more extreme. 
South Korea's KOSPI index .KS11, whose flock of top chipmakers made it one of the main beneficiaries of AI euphoria, plunged almost 8% in its seventh consecutive drop, while the Nikkei 225 .N225 fell 5% to make it six-in-row for Tokyo too. .T
"The selloff in Asia looks less like a sudden deterioration in technology fundamentals and more like a repricing of the cost of capital," said Charu Chanana, chief investment strategist at Saxo Bank in Singapore.
"Investors are not questioning whether AI demand exists," she said. "They are increasingly questioning what price they should pay for that growth when interest rates are high, volatile and potentially moving higher again."
The lure of safety lifted gold 1% XAU= in London while German Bund yields DE10YT=RR, which move inversely to price, hit a more than one-month low as both French FR10YT=RR and UK GB10YT=RR yields also eased. GVD/EUR   
Wall Street futures pointed to the stock market turbulence continuing, though. The main US stock markets .N logged a third straight fall on Wednesday after US consumer price inflation accelerated by more than expected in September.
The S&P 500 .SPX, which hit its latest record high only last week, fell 1.1%, the Nasdaq Composite .IXIC tumbled 1.9% and a gauge of semiconductor stocks .SOX extended losses into a sixth day.
That resulted from the prospect of higher interest rates pummelling shares of Oracle, CoreWeave and other AI stocks sensitive to higher borrowing costs.
"While the initial selloff was triggered by the hotter-than-expected CPI, tech was the main driver of today’s selloff," JPMorgan analysts wrote in a note.
"AI was again the main challenge ... with financing risks and IPO timelines still at the centre of the story."
AI OF THE STORM
Asia's overnight troubles saw Taiwan Semiconductor Manufacturing Company 2330.TWTSM fall 2%, Samsung Electronics 005930.KS plunge 9.9%, memory chipmakers SK Hynix 000660.KS and Kioxia Holdings 285A.T plummet more than 11% each, and AI investor SoftBank Group 9984.T lose more than 9%.
The cost of insuring AI-linked tech giants against default has also increased, in some cases to records, with credit default swaps widening for cloud computing giant Oracle ORCL.N, AI investor SoftBank 9984.T and data-centre operator CoreWeave CRWV.O.
Some strategists found reasons for optimism, saying volumes were relatively light and October is typically a volatile time of year for markets.
"I’m not worried, because stocks are not expensive, there is no sign of a recession, and demand still massively exceeds supply in most parts of the AI story," said Mark Matthews, head of research for Asia at Bank Julius Baer in Singapore.
Defying the gloom, AI chip giant TSMC 2330.TW posted a 69% jump in third-quarter net profit to a record T$763.1 billion ($23.59 billion) on Thursday, beating market forecasts.
     
STRAIT TALKING 
The backdrop of investor anxiety drove safe-haven buying of government bonds, with the yield on the US 10-year Treasury bond US10YT=TWEB closing back in on 5% as it dropped 10 basis during Thursday's Asian and European sessions.
"We continue to think that yields at current levels offer decent value," DBS analysts wrote in a note. "We are not convinced that the Fed will have to deliver back-to-back hikes on the back of one set of CPI numbers." 
Wednesday's U.S. inflation data had once again tweaked expectations for the Fed's rate path, with traders briefly pricing in roughly even odds of a hike this month before scaling back those bets.
Fed funds futures are now pricing an implied 75% probability the US central bank will stay on hold at the end of its next two-day meet on October 28, little changed from the start of the week, according to the CME Group's FedWatch tool.
In the foreign exchange markets, the dollar slipped from an 18-month peak. Against the yen JPY= it was down 0.4% at 157.725 yen, while the euro EUR= was up 0.6% at $1.12 and sterling GBP= was 0.5% higher and buying $1.32.
The Australian dollar AUD= declined 0.3% to $0.6954 after employment unexpectedly decreased by 39,300 jobs in September, against expectations of an increase of 20,000.
Investor attention now turns to US producer prices and retail sales data due for release on Thursday. 
In oil markets, Brent crude LCOc1 was down 2% at $103.8 a barrel as traders weighed up the effects of US sanctions relief on supply against attacks on shipping through the Strait of Hormuz.
     
     

 (Reporting by Marc Jones; Editing by Clarence Fernandez)
 ((marc.jones@thomsonreuters.com; +44 (0)20 7513 4042; Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net  X @marcjonesrtrs))