Introduction: Chip stock sell-off deepens ahead of UK GDP report
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The sell-off in chip stocks is deepening today, worrying investors as market await the latest UK GDP report.
Signs of rising inflation in the US are driving concerns about the risk of interest rate hikes, and AI-linked stocks are bearing the brunt.
In South Korea today, the KOSPI share index has plunged by over 8%, extending its recent losses. Chip giants Samsung Electronics (-9%) and SK Hynix (-10.5%) are leading the rout.
Japan’s Nikkei 225 is sliding too – it’s down by 4.5% in late trading.
This follows a drop on Wall Street on Wednesday, where the S&P 500 index fell by 1.1% and the Nasdaq Composite lost 1.9%.
That includes an 11% plunge in Dell’s shares, which CNBC blames on mounting concerns that enterprise spending on artificial intelligence won’t justify the AI buildout.
The news yesterday that US inflation has jumped to 3.7% has alarmed traders, as it makes it more likely that the US Federal Reserve will raise interest rates soon – possibly even at the end of this month.
ChrisWeston, analyst at brokerage Pepperstone, says signs that US inflation pressures are spreading worries investors:
Further evidence of right-tail inflation risk in the US has reinforced the higher-for-longer rates narrative, with sellers emerging across risk assets and interest rate-sensitive equities coming under renewed pressure.
The breadth of price pressures across the CPI basket has been particularly concerning, challenging a market desperately in need of evidence of disinflation.
These inflation pressures will also worry policymakers at the IMF’s Annual Meeting in Bangkok, which continues today (of which more shortly…)
We’ll soon learn how the UK economy performed in August, too. The latest GDP data, due at 7am, is expected to show a fall of 0.1% in the month, as growth fizzled out after a strong July.
The agenda
7am BST: UK GDP report for August
10am BST: Eurozone industrial production report for August
1.30pm BST: US initial jobless claims data
1.30pm BST: US PPI index of producer price inflation in September