Deutsche Bank’s Early Morning Reid describes a broad slump in global equities driven by renewed doubts over the AI trade. The S&P 500 fell 0.51% with futures down further, while the Nikkei, CSI 300 and Hang Seng posted sharp declines. The semiconductor index is nearing bear-market territory, while mega-cap technology stocks are also coming under renewed pressure.

AI and chips drag global stocks

"As we go to press this morning, global equities are continuing to slump, as fresh doubts about the AI trade have driven a pronounced selloff in tech stocks. Indeed, the S&P 500 fell -0.51% yesterday, and this morning futures are down another -0.78%."

"Before the slump accelerated overnight, US equities had already seen a rough session yesterday thanks to the fresh slide in chip stocks. In fact, the Philly semiconductor index (-4.29%) hit an 8-week low, having now shed -18.91% from its peak less than a month ago. So that now leaves it close to the -20% mark that would mark a technical start of a bear market, which is a big turnaround from Q2, when it posted its best quarterly performance since the index began in the early 1990s. "

"The AI-related tech pullback wasn’t limited to chipmakers either, with a decline for the Mag-7 (-1.27%) led by a slide in Alphabet’s shares (-4.44%) after Bloomberg reported a months-long delay for its new Gemini 3.5 Pro AI model. So that tech decline dragged on the S&P 500 (-0.51%), which fell even as nearly three-quarters of its constituents advanced on the day"

"There wasn’t a single catalyst behind the selloff, but we had TSMC’s earnings shortly after we went to press yesterday, and their share price is down -5.26% this morning after they said that capital expenditure would be higher than previously forecast. Meanwhile, Netflix’s earnings disappointed after the close last night, pushing their shares almost -9% lower in after-hours trading."

"Moreover, there’s no sign of any letup this morning in Asia, with very sharp declines for the Nikkei (-4.81%), the CSI 300 (-2.45%), the Hang Seng (-1.98%) and the Shanghai Comp (-1.64%), whilst the KOSPI is closed for a public holiday. Indeed, that slide indicates the Nikkei is currently likely on course for its worst day since March, and also leaves the index on track for technical correction territory, having now shed over 12% since its peak less than a month ago."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)