Macro update
Asian markets tumble as inflation fuels rate concerns: Hotter-than-expected US inflation strengthened expectations of tighter Federal Reserve policy, weighing heavily on technology stocks. Japan’s Nikkei plunged 4.8% by midday, South Korea’s KOSPI dropped 8%, triggering its first circuit breaker since July, and MSCI’s Asia-Pacific index excluding Japan fell sharply.
AI and semiconductor shares lead regional sell-off: Samsung Electronics, SK Hynix and SoftBank Group suffered steep losses, while Tokyo-listed Advantest slumped 13.9%. Reports of financial distress at CoreWeave and growing doubts about AI funding and capital expenditure added to concerns over higher interest rates.
US stocks slide as rate worries deepen: The S&P 500 fell 1.1% and the Nasdaq dropped 1.9%, with semiconductor shares declining for a sixth consecutive session. Oracle, CoreWeave and Dell led losses among AI-related stocks, although Apple closed above a $5 trillion market capitalisation for the first time.
Markets scale back Fed rate-hike bets: Expectations of an October increase initially surged following the inflation data, but comments from Fed officials Michelle Bowman and Mary Daly suggesting policymakers could wait tempered market pricing. Investors now expect rates to remain unchanged on 28 October, ahead of producer price data, retail sales and a speech by Chair Kevin Warsh.
Dollar retreats as Treasury yields fall: Safe-haven demand pushed the 10-year Treasury yield down to around 5.1%, pulling the dollar index back to 101.99 from an 18-month high. The euro and sterling recovered, while the Australian dollar weakened after an unexpected fall in employment and emerging Asian currencies came under pressure, with the Philippine peso hitting a record low.
Oil eases while gold rebounds on shifting risks: Brent crude slipped to around $104 a barrel as US moves to ease sanctions on shadow-fleet shipping offset escalating attacks in the Strait of Hormuz. Gold climbed 1% to approximately $4,147 an ounce, supported by the weaker dollar amid continued uncertainty over interest rates and energy supplies.
