San Francisco Frontiers - Tech sell-off rolls on as hot inflation data stokes rate worries

"A glance across major US equities this morning shows that the tech sell-off is still in progress," said market analyst David Morrison at Trade Nation.

"Once again, chip stocks are in the forefront of the current round of derisking," he added.

Shares in AI chip giant Nvidia shed 3.1 percent.

Those in rivals Micron Technologies, Marvell and AMD fell more than five percent.

Shares in AI data centre infrastructure company CoreWeave fell 7.3 percent after plunging 15.5 percent on Wednesday.

The company is a big client of Nvidia chips and Nvidia is a major shareholder.

The Nasdaq Composite and S&P 500, which have the heaviest exposure to tech stocks, both fell at the start of trading in New York.

The blue-chip Dow rose, however, "suggesting that while some money is coming out of tech, investors aren't yet ready to throw in the towel when it comes to owning equities in general", said Morrison.

European stock markets were more resilient, benefitting from their lower exposure to the tech sector, as well as falling oil prices and government bond yields.

Seoul and Tokyo bore the brunt of the selling in Asia as traders bailed out of chipmakers, tracking sharp losses on Wall Street on Wednesday.

Seoul's Kospi dived more than eight percent -- leading to a brief trading halt -- before slightly paring the losses, with semiconductor firm SK hynix sinking more than 11 percent and Samsung more than nine percent.

Tokyo shed close to five percent, driven by sharp falls for Advantest, Kioxia and investment titan SoftBank.

"The tech sell-off has continued with pace, exacerbated by US inflation data which increased expectations for US interest rate hikes this month," said Dan Coatsworth, head of markets at AJ Bell.

"US Treasury bond yields fell, suggesting that investors are moving into supposed lower-risk assets," he added.

Markets, already struggling with concerns about the outlook for the AI investment boom, were stung after data released on Wednesday showed the US consumer price index jumped more than expected to 3.7 percent in September.

Figures released on Thursday showed US wholesale inflation surged past analysts' expectations in September -- the 6.3 percent increase from one year ago -- marking its biggest year-on-year jump since 2022 as petrol prices rocketed due to the war with Iran.

The inflation figures put pressure on the Fed to raise rates at least once more following September's hike.

The bank's decision is due on October 28, a week before the US midterm elections.

Tech firms rely heavily on borrowing to fund their huge AI investments, meaning they are particularly sensitive to higher interest rates.

Saxo UK investor strategist Neil Wilson pointed to "worries about the AI buildout, bubbly valuations, lower-than-expected earnings growth at leading US frontier labs, Chinese competition" as additional factors behind the tech selling.

- Key figures at around 1330 GMT -

New York - Dow: UP 0.5 percent at 51,884.64 points

New York - S&P 500: DOWN 0.5 percent at 7,677.22

New York - Nasdaq Composite: DOWN 1.4 percent at 26,320.83

London - FTSE 100: UP 1.0 percent at 10,835.53

Paris - CAC 40: UP 0.6 percent at 7,918.00

Frankfurt - DAX: DOWN 0.2 percent at 26,320.83

Seoul - Kospi: DOWN 7.6 percent to 5,554.22 (close)

Tokyo - Nikkei 225: DOWN 4.9 percent to 64,425.95 (close)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 24,062.72 (close)

Shanghai - Composite: DOWN 1.6 percent at 3,707.48 (close)

Brent North Sea crude: DOWN 1.0 percent at $104.96 per barrel

West Texas Intermediate: UP 1.0 percent at $96.00 per barrel

Euro/dollar: UP at $1.1211 from $1.1147 on Wednesday

Pound/dollar: UP at $1.3249 from $1.3189

Dollar/yen: DOWN at 157.69 yen from 158.37 yen

Euro/pound: UP at 84.60 pence from 84.57 pence

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I.Wright--SFF