Chip Stocks Tumble, Oil Hits USD114 as Global Markets Slide
Donald Trump made remarks suggesting Washington could step up military pressure on Iran after the Nov. 3 midterm elections, while Yemen’s Houthi group kept up its attacks on Saudi Arabia. December Brent crude rose 0.7% to $114 a barrel.
Chipmakers bore the brunt of the selling. Intel sank 8.04%, AMD shed 8.1%, Micron Technology slid 6.26%, Broadcom lost 4.31% and Qualcomm dropped 2.88%. Investors questioned whether massive AI outlays can generate returns, which triggered volatility across semiconductor, data center and cloud computing stocks.
Analysts said rising global borrowing costs are making data center construction and compute expansion more expensive, which weakens the financial case for new projects.
US data and bonds
US initial jobless claims fell to 194,000 in the week ending Oct. 17, below forecasts. Investors rotated out of tech and AI shares and into safe-haven government bonds, pushing the 10-Year Treasury yield down roughly 16 basis points to 4.96% on Thursday. It was the first time in about a month that the yield closed below 5%.
The US dollar slipped 0.2% to 101.5 for a third straight daily loss, as falling yields and stronger demand for other currencies weighed on it. The dollar index edged up 0.1% to 101.6 in early Friday trading.
Gold fell 2.8% to $4,024 per ounce on Thursday. Higher oil prices stoked inflation worries and bets on prolonged elevated interest rates, pressuring the metal. It was flat at $4,022 on Friday.
The S&P 500 lost 1.21% and the Nasdaq Composite tumbled 2.6%, while the Dow Jones Industrial Average finished flat. US indexes opened lower on Friday.
Europe
European stocks also closed lower Thursday, hit by ongoing civil unrest in France and surging oil prices. France’s 10-year bond yield jumped to 5.07%, its highest level since 2002, as street protests continued and raised fears for fiscal discipline.
Technology shares were further pressured by security vulnerabilities in the PHP programming language, which underpins a large share of the world’s internet infrastructure.
Thursday’s closes: the UK’s FTSE 100 fell 0.26%, Italy’s FTSE MIB 30 dropped 2.54%, Germany’s DAX 40 lost 1.07% and France’s CAC 40 declined 1.39%. European indexes opened mixed on Friday.
Asia
The slump spread to Asian markets, with Hong Kong the exception. Worries that AI investment may not be sustainable, and that data center spending could slow, fueled selling across the region. South Korean chipmakers and Japanese technology firms were sold off in the wake of the US tech decline.
Data released Friday showed Japan’s annual inflation at 2.1%, in line with forecasts. Core inflation climbed above 2% in September for the first time in nine months, topping the Bank of Japan’s (BoJ) target and strengthening expectations of a rate hike.
Near Friday’s close, Japan’s Nikkei 225 was down 0.7%, China’s Shanghai Composite had fallen 0.3% and South Korea’s Kospi had lost 0.8%. Hong Kong’s Hang Seng bucked the trend, climbing 0.7%.
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