Global equity markets dip as AI stocks face sharp sell-off
European and Asian indices fell on Wednesday, led by steep declines in South Korean and Japanese markets, as investors sold off artificial-intelligence-related shares amid concerns over high valuations and rising bond yields.
Shares in Europe and Asia slipped on Wednesday as investors trimmed exposure to artificial-intelligence (AI) stocks. Germany's DAX fell 0.2% to 26,085.69, while France's CAC 40 rose 0.3% to 8,532.16 and Britain's FTSE 100 dropped 0.2% to 10,707.36. Futures for the U.S. S&P 500 and Dow Jones Industrial Average were largely unchanged.
In Asia, South Korea's Kospi led the regional decline, sliding 5.8% to 6,471.17. Major Korean AI beneficiaries Samsung Electronics and SK Hynix fell 7.8% and 9.8% respectively, mirroring losses in their U.S. counterparts. Japan's Nikkei 225 dropped 3.2% to 65,326.42 as higher bond yields and tech-stock selling weighed on the market. The yield on 10-year Japanese government bonds hovered near a three-decade high of over 2.9%, reflecting expectations of a rate hike by the Bank of Japan.
China's Shanghai Composite fell 2.4% to 3,894.42, though humanoid-robot maker Unitree surged nearly 630% in its debut on the STAR market, closing 460% above the IPO price. Another Chinese robot firm, UBTech, listed in Hong Kong, declined 10.7%. Hong Kong's Hang Seng edged up 0.1% to 25,495.07, while Taiwan's Taiex slipped 1.3% and Australia's S&P/ASX 200 fell 0.2% to 9,053.80.
The sell-off extended to U.S. tech shares that have benefited from the AI boom. Micron Technology dropped 7%, Nvidia fell 2.3% and Broadcom slid 3.2%, contributing to broader declines on the S&P 500, which fell 0.7% for a third consecutive day. Rising oil prices and uncertainty over a potential U.S.–Iran agreement have also pressured markets; Brent crude rose to $91.78 per barrel and U.S. crude to $84.86.
Higher bond yields remain a concern. The 10-year U.S. Treasury yield edged down to 4.70% from 4.72% but stays well above pre-conflict levels, while the 30-year yield remains near its 2007 peak. Elevated yields can dampen investor appetite for high-priced stocks and increase borrowing costs for both governments and technology firms.
Currency movements were modest, with the U.S. dollar slipping to 159.11 yen and the euro strengthening to $1.1607.