Inflation rekindles interest rate hike expectations, Asian stock markets plunge, Nikkei drops 3%, South Korean stocks fall more than 5%, SK Hynix plummets 9%
The Korea Composite Stock Price Index (KOSPI) continued to decline after opening 5.6% lower, with the biggest loss reaching 6%. Samsung Electronics and SK Hynix fell by more than 6% and 9%, respectively. The Nikkei 225 Index dropped more than 3% at one point, with SoftBank plunging over 8% and Kioxia tumbling more than 8%. The MSCI Asia Pacific Index fell over 1% to around 266 points, marking its fourth consecutive trading day of decline. Gold rebounded by 0.87% after four straight days of losses, having hit about $4,100 overnight.
US inflation data unexpectedly rose, combined with concerns over an AI valuation bubble, triggering a fresh wave of turmoil for global tech stocks. Asia-Pacific markets opened sharply lower on Thursday, with the South Korean stock market suffering a particularly severe plunge, forcing the exchange to activate the circuit breaker mechanism.
On Thursday, Korea's composite index plunged over 6% at the open, triggering the exchange's circuit breaker mechanism. The Korea Exchange activated the Sidecar mechanism for both KOSPI and KOSDAQ to halt algorithmic selling. Both Samsung Electronics and SK Hynix suffered sharp declines.
The Nikkei 225 index fell more than 3%, SoftBank plunged more than 8%, and Kioxia dropped over 8%. The MSCI Asia Pacific Index declined over 1% to near 266 points, marking a fourth straight day of losses. Nasdaq 100 futures extended losses by about 1% during Asian trading hours.
Chip stock sell-off spreads across APAC, Korea triggers circuit breaker
Panic quickly spread after Asia-Pacific markets opened. Growth sectors focused on semiconductors, optical communication, and AI hardware infrastructure collectively saw significant pullbacks.
The MSCI Asia Pacific Index at one point extended losses to 1%, standing at 266.28 points for the fourth consecutive day of declines. The sell-off was most pronounced in South Korea. After opening down 5.6%, Seoul’s composite index fell further, with the biggest drop reaching 6%.
Samsung Electronics and SK Hynix fell over 6% and 9% respectively, as the Korea Exchange activated the Sidecar mechanism for both KOSPI and KOSDAQ indices to halt algorithmic sell orders and mitigate abnormal market fluctuations.
The Japanese market also saw substantial declines. The Nikkei 225 index dropped more than 3% intraday, while the TOPIX lost as much as 2%.
Among the notable movers, high-end chip packaging substrate giant IBIDEN plummeted 10.27%; semiconductor wafer maker SUMCO tumbled 9.53%; EUV inspection unicorn LASERTEC and memory chip giant Kioxia slumped 8.64% and 8.48% respectively.
At the same time, data center cable makers that were previously popular also faced sharp sell-offs, with Fujikura and Furukawa Electric plunging 9.02% and 8.37% respectively. Tech investment giant SoftBank Group dropped 7.62%, while upstream resources and electronic materials representative Sumitomo Metal Mining also closed down 7.13%.
Australia's S&P/ASX 200 index fell 0.8%. Nasdaq 100 futures extended losses to 1%, and Hang Seng futures were down 1.1%.
Inflation data rekindles rate hike expectations
According to Wallstreetcn, US September CPI rose 3.7% year-on-year, and core CPI climbed to 2.6%, both surpassing expectations, with energy and service prices jointly pushing inflation higher. After the data was released, market bets on a Fed rate hike in October once rose to 50%, while the probability of a December rate hike surged above 95% at one point.
Lazard’s Chief Market Strategist Ronald Temple said:
Today's CPI report shows that inflationary pressure is spreading, and there is an increasing risk that the Fed will fall behind the curve.
Regan Capital’s Skyler Weinand commented:
Inflation is stubborn and running counter to expectations — nothing could be clearer. We expect the Fed to pause rate hikes in October, but anticipate the rate hike cycle will resume in December.
The 10-year yield fell by 2 basis points overnight in New York to 5.19%, and dropped a further 5 basis points to 5.137% during Thursday's Asian session.
Dollar weakens, gold price drops for four straight days
On the currency front, the US dollar was on the weak side during Thursday’s Asia-Pacific session, giving up some overnight gains. The US Dollar Index fell 0.3%, the euro rose to 1.1195, and the Japanese yen strengthened slightly to 157.94 per dollar.
In commodities, spot gold prices quickly rebounded 0.87% to near $4,141 per ounce, though it had fallen for four straight days earlier, touching around $4,100 overnight.
WTI crude oil was last at $94.70 per barrel, down slightly by 0.55%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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