A brutal Monday selloff across Asian markets signals the AI trade may be running out of runway.
The nine-week AI-driven equity rally hit a wall Monday. Weak guidance from Broadcom and a hotter-than-expected U.S. jobs report combined to shake investor confidence, and the fallout was swift and wide.
KEY DETAILS
South Korea’s KOSPI, the world’s top-performing index this year, crashed 5%, putting it 13% below last week’s record peak. Japan’s Nikkei slid nearly 4%, with chip-sector names hit hardest. Taiwan’s benchmark dropped 3.9%. In the U.S., the Nasdaq had already fallen 4.2% on Friday, while Nasdaq futures attempted a modest bounce on Monday. European futures slipped 1%.
The strong jobs data has traders now pricing in a rate hike this year – a sharp pivot that rattled markets broadly. Bitcoin added to the pain, hovering near $63,000 after its worst weekly drop since the FTX collapse in late 2022.
MARKET REACTION
Oil surged ~3.5%, with Brent crude at $96.45/bbl after Israel struck military targets inside Iran. The dollar firmed above 160 yen; the euro sat at $1.1531, the Australian dollar at $0.7055. Two-year Treasury yields rose over 11 basis points on Friday and continued climbing on Monday.
WHY IT MATTERS
This looks like a momentum unwind, not a collapse of the AI thesis, but the distinction matters less when positions are bleeding. With SpaceX’s massive IPO expected to price on Thursday, plus upcoming listings from Anthropic and OpenAI, capital is being reshuffled fast. Throw in U.S. CPI data on Wednesday and ECB rate decisions, and volatility isn’t going anywhere this week.
Watch Thursday’s SpaceX pricing, Wednesday’s inflation print, and whether tech names stabilize or extend losses. If yields keep climbing, the pressure on growth stocks won’t ease.
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