Global markets slide as AI bubble fears trigger tech sell-off; KOSPI plunges 10%, Nasdaq down 3%
A wave of profit-taking on overvalued AI and chip stocks swept across global markets on 23 June, with South Korea's KOSPI index tumbling nearly 10% and the Nasdaq falling 3% at the open.
Asia bears the brunt
Selling that began on Wall Street a day earlier intensified across Asia. South Korea's KOSPI closed 9.99% lower at 8,203 points, its worst session in recent history, forcing authorities to activate circuit breakers multiple times. Samsung Electronics and SK hynix each lost over 11%. Tokyo's Nikkei 225 fell 3.55% to 69,788, while Shenzhen dropped 2.35% and Hong Kong 1.8%.
- KOSPI
- -9.99 %
- Nikkei 225
- -3.55 %
- Shenzhen
- -2.35 %
- FTSE MIB
- -1.46 %
- DAX
- -0.9 %
- CAC 40
- -0.7 %
- Nasdaq
- -3 %
- Dow Jones
- 0.22 %
Europe follows lower
European indices opened deep in the red before paring losses. Milan's FTSE MIB was the worst performer, down 1.46%, with StMicroelectronics sliding 8% and Stellantis 6.8%. Frankfurt lost 0.9%, Paris 0.7%, while London was nearly flat (-0.09%) a day after Prime Minister Keir Starmer's resignation. The Stoxx Europe 600 ended 0.7% lower, cushioned by gains in energy and defensive sectors.
Wall Street mixed
In New York the Dow Jones Industrial Average held steady (+0.22% mid-session), supported by easing geopolitical tensions and solid blue-chip earnings. The tech-heavy Nasdaq, however, opened 3% lower before attempting a recovery. A key chipmaker index slumped 7%. SpaceX, which had debuted on 12 June, fell 16.4% in its third straight losing session. Alphabet lost 5%, Amazon 4.7% and Broadcom 4.5%.
- Wall Street closes with heavy tech losses; SpaceX down 16%
- Asian markets open sharply lower; KOSPI triggers circuit breakers
- European markets open in the red; Milan leads losses
- US markets open mixed; Dow flat, Nasdaq down 3%
What drove the sell-off
After months of AI-fuelled rallies, investors began questioning whether the enormous capital poured into artificial intelligence can generate profits that justify record valuations. The KOSPI had surged over 160% year-to-date, drawing speculative retail flows and pushing technical indicators deep into overbought territory. Some analysts pointed to end-of-semester portfolio rebalancing as an additional factor, with managers trimming their best-performing positions. US markets also fretted about a possible Federal Reserve rate hike after strong PMI data.
The market as a whole remains supported by solid fundamentals.
Oil and safe havens
Crude oil slipped to $73.55 a barrel as tanker traffic through the Strait of Hormuz increased following a provisional peace deal between the United States and Iran. Government bonds rallied, and the Japanese yen and Swiss franc outperformed. Bitcoin fell 3%, moving in the opposite direction of traditional havens.
