Technology shares suffered steep losses across Asian markets Monday as investors hit the pause button on the scorching artificial intelligence investment surge, with South Korea’s KOSPI index plunging more than 8% and activating trading halts.
The downturn mirrored last week’s turbulence on Wall Street, sparked by stronger-than-expected U.S. employment figures that heightened anticipation for Federal Reserve rate increases — which typically hurt growth-oriented stocks.
Financial markets now estimate a greater than 70% probability the Fed will implement a rate hike in December, climbing from 45% odds just one week prior, based on CME FedWatch tool data.
Friday’s employment report arrived shortly after Broadcom delivered disappointing earnings results last week, causing its shares to tumble and pulling down other tech company valuations.
“But that’s the price to pay for perfection – when expectations run so high, even a small miss can deliver a huge blow.”
Market experts and investors have largely characterized the recent decline as a “healthy correction,” noting that concentrated holdings and borrowed investment positions have intensified the market swings, though the duration of the downturn remains uncertain.
In currency markets, the dollar reached a two-month peak, supported by Fed rate increase speculation and U.S. economic strength.
The strengthening dollar drove the yen further into potential intervention levels, keeping investors watchful for additional yen-purchasing measures from Tokyo to halt the currency’s decline.
Updated economic output figures released Monday revealed Japan’s economy slowed during the January-March period compared to the prior quarter due to weak business investment spending.
Monday’s economic calendar remains sparse, though the upcoming week features the major SpaceX public offering and U.S. price inflation statistics, along with a European Central Bank policy decision.
Meanwhile, Middle East conflicts continue, with Israel reporting strikes on military installations in western and central Iran on Monday, despite reports that U.S. President Donald Trump advised Israeli Prime Minister Benjamin Netanyahu to avoid additional attacks.
Important market developments for Monday include:
– Boeing scheduled to announce May delivery and order figures
– International airline executives convening for a conference in Rio de Janeiro
– France conducting reopened auctions for 3-month, 4-month, 6-month and 11-month government securities
– Germany holding reopened sales of 5-month and 11-month government bonds
