NEW YORK — Global financial markets experienced a severe downturn Thursday as hotter-than-anticipated U.S. inflation figures fueled concerns of additional Federal Reserve interest rate increases, rattling an artificial intelligence sector already burdened by heavy borrowing.
The retreat began on Wall Street during Wednesday’s trading session and gathered speed across Asian and European exchanges overnight. Investors unloaded technology and semiconductor shares, prompting trading interruptions in Asia and pushing key equity benchmarks to multi-month lows.
Asian markets plunge as chipmakers tumble
In South Korea, trading halts were triggered as the benchmark Kospi suffered dramatic losses. The index fell roughly 8 percent to touch a six-month closing low, according to The Guardian, while Fortune reported a 7.57 percent decline. The slide was led by the country’s two dominant memory chip manufacturers, Samsung Electronics and SK Hynix, which plunged roughly 9.5 percent and 11 percent, respectively. Yahoo Finance noted that the two corporate giants comprise more than half of the total market capitalization in South Korea.
Regional losses were widespread. Japan’s Nikkei 225 declined 4.9 percent, weighed down by an 11 percent slide in memory manufacturer Kioxia and a 10 percent plunge in SoftBank, The Guardian reported. In China, the Shanghai Shenzhen CSI 300 dropped as much as 2.4 percent to its lowest mark since August 2025. In Taiwan, chipmaking titan TSMC slid 2 percent despite strong operational results.
European exchanges opened lower as well. The regional Stoxx 600 slipped 0.4 percent, while Germany’s DAX dropped 0.53 percent, France’s CAC 40 fell 0.19 percent, and Britain’s FTSE 100 dipped 0.06 percent, according to The Guardian.
Inflation shock ripples through Wall Street and bonds
The turmoil followed Wednesday’s retreat in New York, where the Nasdaq Composite tumbled 1.9 percent and the S&P 500 slid 1.1 percent, logging its sharpest single-day decrease since July, The Guardian reported. Thursday morning indicators suggested the pressure would persist, with Nasdaq futures falling roughly 1 percent ahead of the opening bell.
The catalyst for the sell-off was a report showing the U.S. consumer price index climbed to 3.7 percent in September, beating expectations and marking the fastest pace of price increases since May’s 4.2 percent rate. The data heightened expectations that the Federal Reserve could lift interest rates again as soon as late October.
“Markets have just had an incredibly tumultuous 24 hours, as a strong US CPI print was then followed up with mounting fears around the AI trade,” Deutsche Bank analysts led by Jim Reid said, as reported by The Guardian. Reid emphasized that the price pressures were not limited to energy, adding, “This wasn’t just an energy surge driving prices higher, as there were broad-based moves across the consumer basket.”
Volatility also hit the fixed-income market. Fortune reported that the yield on the benchmark 10-year U.S. Treasury note swung sharply, surging as high as 5.32 percent before retreating to 5.08 percent on Thursday morning.
Mixed signals across the technology landscape
The tech retreat occurred alongside growing scrutiny of debt levels among firms investing in computing infrastructure. Neocloud provider CoreWeave dropped more than 15 percent on Wednesday after social media circulation of its bond yields raised alarms over borrowing expenses, Yahoo Finance reported. Other major tech names also retreated, with Oracle dropping 8.83 percent and chip leaders Nvidia, AMD, Broadcom, and Intel all logging declines.
The selling overshadowed several notable milestones within the sector. Apple shares closed at a record high, pushing its valuation to $5 trillion—a threshold previously attained only by Nvidia, according to Fortune. AI developer Anthropic posted an adjusted profit alongside $17 billion in third-quarter revenue, though top-line growth trailed prior projections. TSMC also reported that third-quarter profit expanded 69 percent from a year earlier, lifting its fourth-quarter revenue target to as much as $54.3 billion.
Yet institutional warnings have compounded investor anxiety. The International Monetary Fund cautioned this week that an asset price reversal in artificial intelligence could threaten international economic stability, warning that “the consequences of an AI correction could be global.”
Whether market declines stabilize or deepen remains uncertain as traders watch how central bank officials respond to persistent inflation and await further corporate earnings to test the durability of tech capital spending.
