Asian markets slide as US inflation rises; South Korea's Kospi falls 8 per cent
Stronger-than-expected US inflation and worries over AI spending triggered heavy selling across Asian markets on Thursday, with Japan's Nikkei 225 down 4 per cent.
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Asian stock markets saw heavy selling on Thursday. South Korea's Kospi fell 8 per cent, while Japan's Nikkei 225 recorded a 4 per cent decline. The US Nasdaq was not untouched by the pressure either. The MSCI Asia-Pacific index excluding Japan also slipped about 1.2 per cent.
The weakness in the markets has been attributed to higher-than-expected US inflation data and growing concern over investment in companies linked to artificial intelligence (AI). This weakened sentiment in markets around the world and the US market took a hit. The fall in Asian markets is expected to show up directly in the shares of technology and semiconductor companies.
US annual consumer inflation rose from 3.4 per cent in August to 3.7 per cent in September. Following the data, investors fear that the US Federal Reserve may raise interest rates further instead of cutting them. Amid the fear of higher rates, investors may pull money out of riskier assets. The pressure is felt especially by technology companies, because their future earnings and expansion plans depend on large capital investment.
Selling pressure on shares of AI-linked companies has increased further in markets around the world. Investors are worried about whether the heavy spending by companies on AI infrastructure, data centres and chip manufacturing will deliver the expected returns. Technology and semiconductor shares were also weak in the US market. This affected Asian markets, where many large companies are tied to AI and the chip supply chain. Semiconductor companies make up a large share of the South Korean market, so the fall there was sharper.
The question now is what will happen to the Indian stock market. Given the weakness in Asian markets and the negative cues from the US market, the Indian market is likely to open cautious or weak. At 7:50 am, GIFT Nifty was down just 13 points at 22,609. On this basis, the domestic market may open slightly weak. However, GIFT Nifty signals show only the early trend.
