A widespread selloff hit global markets, fueled by investor apprehension regarding high valuations in high-flying tech stocks. South Korea's Kospi Index plunged 10% from its recent record high. Memory stock companies, which had seen triple-digit gains this year, suffered some of the most substantial losses. SpaceX was also on track to fall below its initial public offering price of $150.
In US premarket trading, Nasdaq 100 futures dropped 2.5%, and S&P 500 futures slid 1.3%. In Seoul, major chip manufacturers SK Hynix Inc. and Samsung Electronics Co. each saw declines of over 10%. Intel Corp. and Micron Technology Inc. led a broader decline among chipmakers in the US. Chinese equities traded in Hong Kong officially entered a bear market.
This downturn in chipmakers, who have been key beneficiaries of the artificial intelligence boom, occurred a day after hyperscalers like Alphabet Inc. also retreated. Investors are increasingly questioning whether future returns can justify the current spending on AI. Attention is now focused on Micron's quarterly results, due on Wednesday, especially after its stock had rallied more than 300% since January.
Commodity markets also reacted, with Brent crude falling for a second consecutive day, trading 0.6% lower at $77.40 a barrel. This was partly due to signs of progress in US-Iran talks, with Washington issuing a 60-day license for Tehran to sell oil internationally. Gold, silver, and copper prices also declined, and Bitcoin experienced its largest drop in three weeks. Treasuries found some relief as weaker crude prices led traders to reduce bets on future Federal Reserve interest-rate hikes.
The Stoxx Europe 600 index fell 0.9%. The MSCI Asia Pacific Index dropped 3.5%, and the MSCI Emerging Markets Index was down 3.7%. The Bloomberg Dollar Spot Index rose 0.2%. Bitcoin declined 3.2% to $62,301.08, and Ether fell 4.8% to $1,649.02. The yield on 10-year Treasuries decreased three basis points to 4.48%.
