Key facts
- Global markets experienced a sell-off driven by investor jitters over high-flying tech stocks and frothy valuations.
- South Korea's Kospi Index plunged 10% from its record high, with chip giants SK Hynix and Samsung Electronics falling over 12%.
- Nasdaq 100 futures dropped 3%, and S&P 500 futures slid 1.5% as tech stocks retreated.
- Japan's Nikkei index closed down 3.55%, and Hong Kong's Hang Seng Index fell 1.8%.
- South Korean stocks rose more than 3% on Wednesday, rebounding from a near 10% fall.
- Japanese stocks extended their losses.
Global markets experienced a significant sell-off as investors turned jittery about high-flying tech stocks and frothy valuations. South Korea's Kospi Index plunged 10% from its record high, with memory stocks and chip giants like SK Hynix and Samsung Electronics among the steepest losers, falling over 12%.
Nasdaq 100 futures dropped 3%, while S&P 500 futures slid 1.5%. In US premarket trading, Intel and Micron Technology led a broader decline among chipmakers. Chinese equities in Hong Kong entered a bear market.
The sell-down in chipmakers, major beneficiaries of the artificial-intelligence trade, follows a retreat from hyperscalers such as Alphabet as investors question future returns justifying current spending. Attention is now focused on Micron's upcoming quarterly results after its stock rallied over 300% since January.
Marija Veitmane, head of equity research at State Street Markets, noted that tech has been the only sector where institutions increased holdings since the start of the Iran war, suggesting some volatility and profit-taking is expected. Brent crude also fell for a second day, trading 0.6% lower at $77.40 a barrel, as traders found comfort in hopeful signs for US-Iran talks.
Gold, silver, and copper prices declined, and Bitcoin headed for its biggest drop in three weeks. Treasuries found some relief as weaker crude prices prompted traders to pare bets on Federal Reserve interest-rate hikes. Benoit Peloille, chief investment officer at Natixis Wealth Management, highlighted the recent run-up in rates following Kevin Warsh's first meeting as Federal Reserve chair as a backdrop to tech sector volatility, stating that rate hikes act as a withdrawal of liquidity for long-duration sectors like tech.
In the rest of Asia, Japan's Nikkei index closed down 3.55%, and Hong Kong's Hang Seng Index fell 1.8%. Singapore shares bucked the trend, with the Straits Times Index inching up 0.03%.