Global stock markets are experiencing intensified sell-offs, and the strong rally in AI-driven trading this year is undergoing a systemic stress test.
Chip stocks led the decline, becoming the central narrative of this sell-off. The South Korean KOSPI index closed down 7.56%, with Samsung Electronics and SK Hynix both falling 11%. The Nikkei 225 index closed down 4.90%, while the Nasdaq 100 futures dropped 1%, signaling further declines for U.S. tech stocks. Meanwhile, risk-off capital flooded into bond markets, with the yield on the 10-year U.S. Treasury falling 8 basis points to 5.10% and the yield on the 10-year German Bund declining 7 basis points to 3.40%.
This round of volatility was triggered by a combination of factors: U.S. CPI data exceeding expectations heightened market expectations of further Fed rate hikes; a sharp decline in CoreWeave bonds intensified reassessment of financing risks in the AI sector; and fundamental doubts about whether AI investments can deliver commensurate returns are driving capital away from growth stocks toward safe-haven assets.
The Nikkei 225 closed down 4.90% at 64,425.95; the KOSPI closed down 7.56% at 5,554.27. Dow Jones futures rose 0.12%, S&P 500 futures fell 0.39%, and Nasdaq 100 futures fell 1.07%. The U.S. 10-year Treasury yield declined 9 basis points to 5.10%. German government bonds opened higher, with the 10-year yield falling 7 basis points to 3.40%. The U.S. Dollar Index dropped 0.3%. Gold rebounded after three consecutive declines, trading at approximately $4,140 per ounce. Brent crude fell 1.6% to $104.45 per barrel.
Chip stocks led the decline, with Asian markets hit hardest.
Asia-Pacific markets have become the epicenter of this sell-off. The MSCI Asia Pacific Stock Index fell 3.2%, nearing its lowest closing level since July. The South Korean KOSPI index led the decline with a nearly 9% drop, as Samsung Electronics and SK Hynix both slid 11%. Bloomberg strategist Mark Cranfield noted that this sharp selloff in Asian markets recalls the situation at the end of July, when the KOSPI also led the decline, but the subsequent demand for safe-haven bonds was limited. He believes, “This time may be different, as the risk of an AI bubble bursting could substantially harm economic growth.”
TSMC fell about 3%, followed by the release of quarterly earnings that beat expectations, but margins fell short of market forecasts. In U.S. markets, the U.S. semiconductor index recorded its longest consecutive decline since May 2025, while the Russell 2000 index entered a technical correction, marking the end of the longest period of calm in U.S. markets since before the COVID-19 pandemic.
Inflation data and CoreWeave impact reignite bets on rate hikes
U.S. CPI data on Wednesday showed the fastest pace of increase in five months, directly fueling market concerns over further Fed policy tightening. Traders promptly increased their bets on additional rate hikes, even though a pause in October is widely expected. Currently, markets are pricing in approximately 40 basis points of cumulative Fed rate hikes before the end of January next year, with the probability of action in October also slightly rising.
David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, said that raising rates now is “likely a foolish move” and explicitly stated he does not expect the Fed to act at its October meeting. Meanwhile, markets are closely watching the scheduled speech by Fed Chairman Kevin Warsh in Bangkok on Friday.
At the corporate level, CoreWeave’s stock plunged as much as 17% on Wednesday, while its bonds, issued at par four months ago and maturing in 2032, are now trading below 78 cents. Jung In Yun, CEO of Fibonacci Asset Management Global, said, “Surprising U.S. CPI data and the sell-off in CoreWeave bonds are prompting investors to reassess financing risks across the entire AI sector.”
AI returns face growing skepticism, with risk-off sentiment dominating the market.
Investors are increasingly scrutinizing whether billions of dollars in AI investments can generate equivalent returns. Hiroshi Namioka, Chief Strategist at T&D Asset Management, said, “Investors are currently reducing risk and shifting funds as much as possible into safe-haven assets, representing a typical and strong risk-aversion sentiment.” Andrew Ticehurst, Senior Interest Rate Strategist at Nomura Securities, also noted that the negative correlation between stocks and bonds is re-emerging, with clear signs of risk-off capital flowing back into the bond market.
Anthropic’s latest data is particularly noteworthy at this time. According to insiders, the company reported third-quarter revenue of $16.8 billion, a figure some analysts believe fell short of expectations. Hebe Chen, Senior Market Analyst at Vantage Global Prime, said, “The market’s reaction to Anthropic’s strong figures was not disappointment, but growing concern over the side effects required to sustain this growth—AI will continue to consume substantial capital in an already liquidity-constrained market, including Anthropic’s upcoming IPO.”
The U.S. dollar weakens, while gold and crude oil diverge.
Risk-off sentiment did not broadly lift the dollar. The Bloomberg Dollar Spot Index fell 0.3%, after reaching its highest level since May 2025 the previous day. Gold rebounded after three consecutive declines, trading at approximately $4,140 per ounce. Global oil benchmark Brent crude dropped 1.6% to $104.45 per barrel, as concerns over supply disruptions in the Middle East eased. Notably, elevated oil prices driven by ongoing tensions in the Middle East are seen as one of the key factors pushing up U.S. inflation and form the deeper backdrop to this market volatility.