London (AFP) – A slump in high-flying technology stocks dragged down global markets Tuesday, with Wall Street tumbling again on valuation concerns and persistent worries over huge AI outlays. The rout that began on US markets Monday took a heavy toll in Asia, with South Korea’s Kospi slumping 10 percent on heavy selling of SK hynix and Samsung.
A plunge in Elon Musk’s rocket-and-AI group SpaceX rattled investor confidence in the lofty tech valuations, wiping hundreds of billions of dollars off its market value since its record-busting IPO earlier this month. “SpaceX shedding more than $600 billion in value and over 30 percent from its post IPO peak, marks one of the most dramatic reversals ever seen in a newly listed mega-cap stock, dragging the whole technology sector down with it,” said market analyst Axel Rudolph at investing and trading platform IG. The stock pulled back into positive territory Tuesday, but US chip companies such as AMD, Nvidia and Broadcom again lost ground.
SpaceX “jumping on the bond train to fund excessive AI and infrastructure spending revives earlier concerns that Big Tech may be spending too much on AI infrastructure and increasingly financing that spending through debt,” said Ipek Ozkardeskaya, senior analyst at Swissquote bank. On Wall Street, the tech-rich Nasdaq was down two percent in late-morning trading, while the broad-based S&P 500 fell one percent and the Dow dipped 0.1 percent. Share prices of South Korean chip giants SK hynix and Samsung tumbled more than 12 percent to drag the Kospi index down 10 percent, having finished Monday at a record high.
“When you have markets that go up in a straight line… they tend to experience sharp moves in the opposite direction at unpredictable times,” said Steve Sosnick of Interactive Brokers. “This is what happens when markets get stretched.” Tokyo also took a beating, shedding 3.6 percent, with tech investment titan SoftBank down more than 10 percent, Tokyo Electron 6.2 percent lower and Advantest off more than two percent.
Investors were also keeping an eye on the yen as it came close to a 40-year low against the dollar, making imports, including oil, more expensive for Japan. Oil prices slipped, adding to recent falls as more tankers return to the Strait of Hormuz following a US-Iran deal aimed at ending the Middle East war. Traffic on Monday through the Strait of Hormuz reached the highest level since the start of the Middle East war, according to maritime tracking data from analytics platform Kpler. A temporary suspension of US sanctions against Iran during their negotiations also raised hopes that more oil would be hitting the market soon.
Brent North Sea Crude shed another 0.7 percent to $77.17 a barrel around 1530 GMT and West Texas Intermediate dropped similarly to $73.23. Those figures were still higher than what they had been on the eve of the US-Israeli war on Iran, but the difference had narrowed to less than 10 percent. Earlier in the conflict, they had soared past the $110 mark.
– Key figures around 1530 GMT –
New York – Dow: DOWN 0.1 percent at 51,656.13 points
New York – S&P 500: DOWN 1.3 percent at 7,372.97
New York – Nasdaq: DOWN 2.0 percent at 25,649.13
London – FTSE 100: DOWN less than 0.1 percent at 10,428.85 (close)
Paris – CAC 40: DOWN 0.7 percent at 8,340.71 (close)
Frankfurt – DAX: DOWN 1.0 percent at 24,893.58 (close)
Seoul – Kospi: DOWN 10.0 percent at 8,203.84 (close)
Tokyo – Nikkei 225: DOWN 3.6 percent at 69,788.38 (close)
Hong Kong – Hang Seng Index: DOWN 1.8 percent at 23,336.28 (close)
Shanghai – Composite: DOWN 1.4 percent at 4,106.25 (close)
Brent North Sea Crude: DOWN 0.7 percent at $77.17 a barrel
West Texas Intermediate: DOWN 0.6 percent at $73.23 a barrel
Euro/dollar: DOWN at $1.1332 from $1.1425 on Monday
Pound/dollar: DOWN at $1.3196 from $1.3244
Dollar/yen: DOWN at 161.54 yen from 161.66 yen
Euro/pound: UP at 86.26 pence from 86.23 pence
© 2024 AFP
