Global Stocks Decline as AI Share Selloff Continues

Global markets came under pressure last week as investors sold shares linked to AI, while higher oil prices and elevated government bond yields added to concerns about the outlook for equities. 

In Europe, Germany’s DAX slipped 0.2%, while France’s CAC 40 gained 0.3%. London’s FTSE 100 declined 0.2%. Asian markets recorded steeper losses, with South Korea’s Kospi dropping 5.8%. Samsung Electronics lost 7.8%, while SK Hynix dropped 9.8%. Both companies have benefited strongly from demand associated with AI and advanced computing. 

Japan’s Nikkei 225 slid 3.2% as investors’ concern over high borrowing costs as well as weakness in technology stocks intensified. The yield on Japan’s 10-year government debt has remained around 2.9%, close to levels not seen for roughly 30 years, amid expectations that the Bank of Japan could increase interest rates to contain inflation. 

China’s Shanghai Composite lost 2.4% to finish at 3,894.42. Unitree, a Chinese developer of humanoid robots, surged almost 630% during its debut on the Shanghai Stock Exchange’s STAR market before ending the session about 460% higher. The initial public offering raised roughly $900 million. 

Shares of rival UBTech, listed in Hong Kong, fell 10.7%, while the Hang Seng Index edged up 0.1%. Taiwan’s Taiex declined 1.3%, while Australia’s S&P/ASX 200 eased 0.2%. 

The selling followed a similar retreat on Wall Street last Tuesday. The S&P 500 dropped 0.7%, extending its losing streak to three sessions. The Nasdaq Composite fell 1.3%, while the Dow lost 0.2%. 

Major AI-related companies bore much of the damage. Nvidia dropped 2.3%, while Broadcom declined 3.2% and Micron Technology fell 7%. Investors have increasingly questioned whether lofty valuations can be justified if spending on processors, memory and data-center infrastructure eventually slows. 

Oil prices have also become a source of anxiety. Brent crude rose 0.8 percent to $91.78 a barrel, while U.S. crude gained 1 percent to $84.86. Market participants remain uncertain over whether Washington and Tehran can reach arrangements that would allow tanker traffic through the Persian Gulf to resume more freely. 

Higher energy costs have also pushed bond yields upward by intensifying inflation concerns. The 10-year U.S. Treasury yield eased to 4.70% from 4.72%, but remained well above its prewar level of 3.97%. The 30-year yield stayed near its highest point since 2007. 

In currency trading, the dollar fell to 159.11 yen from 159.61, while the euro advanced to $1.161 from $1.158. 

As questions linger about the long-term viability of investing in major AI stocks, some investors are beginning to take a closer look at other tech businesses like D-Wave Quantum Inc. (NASDAQ: QBTS) to see whether the technology they are advancing could be the next big thing in stock markets. 

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