Key facts
- Global markets are showing signs of nearing a breaking point due to AI selloffs, geopolitical risks, and inflation concerns.
- US CPI rose 0.6% last month, with core inflation rising 0.3% month-on-month, slightly above consensus.
- CoreWeave's shares fell 15% and its bonds dropped into distressed territory.
- TSMC reported a 69% jump in third-quarter net profit, beating market forecasts.
- Brent crude oil prices surpassed $106 a barrel amid Middle East tensions.
- Yemen's Houthis attacked Saudi Aramco's headquarters and Riyadh's international airport.
Global markets are showing signs of nearing a tipping point, with a significant AI-related selloff this week driven by concerns over rising interest rates and complex financing structures. The Philadelphia Semiconductor Index recorded seven straight daily declines through Thursday, while Asia's tech-heavy indices were also hit hard. US inflation data showed a 0.6% rise in CPI last month, increasing 3.7% year-on-year, with core inflation rising 0.3% month-on-month, slightly above consensus projections. This spooked markets, briefly boosting bets for another Federal Reserve interest rate hike. CoreWeave's shares dropped 15% on Wednesday, and its bonds due 2032 fell into distressed territory. The International Monetary Fund highlighted AI risk, with Jason Wu warning about potential depletion of equity values and servicing difficulties for AI-related debt. Despite TSMC reporting a 69% jump in third-quarter net profit, global AI equities continued to decline. Analysts expect S&P 500 earnings to rise more than 30% year-over-year for the third quarter, with two-thirds from tech and AI. However, early reports from Wall Street banks indicated a potential slowdown in dealmaking and trading. Brent crude rose above $106 a barrel amid escalating attacks in the Middle East, with Yemen's Iran-aligned Houthis attacking Saudi Aramco's headquarters and Riyadh's international airport. Iran also deployed new tactics to target ships in the Strait of Hormuz, leading to two vessels sinking. US President Donald Trump announced a diesel deal with Russia, but its impact was modest. Ukrainian President Volodymyr Zelenskiy cited US "betrayal" as officials complained about a lack of early-warning alerts and a slowdown in Starlink service.