Global Tech Stock Selloff Deepens, Silver Plunges: Markets Wrap

(Bloomberg) — A slump in technology stocks snowballed into Asia as mounting anxiety over frothy valuations and massive artificial intelligence spending drove investors to trim exposure.

MSCI’s gauge of Asian tech shares slid on Thursday for a fifth time in six sessions with Samsung Electronics Co. and SoftBank Group Corp. among the losers. South Korea’s Kospi Index — a poster child for AI investments — led the losses, dropping 3.9%. Sentiment was further hit as Alphabet Inc., Qualcomm Inc. and Arm Holdings Plc fell in extended trading following tepid earnings. US equity-index futures edged up.

European shares were also set for some losses at the open. The British pound and the euro were a touch weaker ahead of rate decisions by the Bank of England and the European Central Bank. Both are expected to stand pat. The Bloomberg Dollar Spot Index rose.

Outside of tech, attention was squarely on precious metals. Silver plummeted as much as 17% and gold dropped as much as 3.5% as the commodities struggled to find a price floor following a historic market rout. Amid the weak risk sentiment, Bitcoin extended its losses and briefly neared $70,000.

While AI-driven selloffs have surfaced in the past, nothing rivals the rout rippling through stock and credit markets this week. With the US economy proving resilient, investors are rotating into other sectors as anxiety mounts over tech valuations, soaring capital expenditures, and the risk that AI will cannibalize established software business models.

“Asian markets are getting a hit from the overnight selloff on Wall Street,” said Nick Twidale, chief market analyst at AT Global Markets. “I don’t know whether we can say the tech peak has been reached, but I do think there is room in the market for more correction. It’s the traditional sell tech and move back into more defensive sectors.”

Rotation out of tech was the main theme during the US session and software firms saw another wave of selling, but moves were bigger in chipmakers. A Bloomberg gauge of the so-called Magnificent Seven companies fell 1.8%.

The Nasdaq 100 had its worst two-day rout since October, breaching its 100-day moving average, a level seen by some analysts as a harbinger for more losses.

Down about 20% from an Oct. 2 high, the Hang Seng Tech Index in Hong Kong is poised to close in a bear market. The gauge has fallen for six straight sessions, as concerns over Chinese tax and earnings weigh on sentiment already shaken by a global AI selloff.

“As crowded momentum trades unwind, we’re seeing pressure in software, semis and parts of the AI ecosystem, while leadership rotates elsewhere,” said Billy Leung, an investment strategist at Global X Management.

In the span of two days, hundreds of billions of dollars were wiped off the value of stocks, bonds and loans of companies across Silicon Valley. Software stocks were at the epicenter, plunging so much that the value of those tracked in an iShares ETF has now dropped almost $1 trillion over the past seven days.

While tech pulled MSCI’s broader Asia Pacific Index down 1.2%, gold and silver emerged as the session’s other dominant narrative.

What Bloomberg strategists say…

“Traders will be watching for this week’s silver-price nadir just above $71, but arguably more significant is the $70 mark. The precious metal hasn’t been in the $60s range since December and a return to that range will deepen the risk aversion mood across assets.”

— Mark Cranfield, MLIV. For full analysis, click here.

Precious metals soared last month in a rally underpinned by speculative momentum, geopolitical upheaval and concerns about the Federal Reserve’s independence. The surge came to a sudden halt at the end of last week, with silver seeing its biggest ever daily drop on Friday and gold plunging the most since 2013. Copper also extended its losses as investors focused on rising inventories.

Elsewhere, US President Donald Trump and President Xi Jinping of China discussed trade and geopolitical flashpoints, including Taiwan, during a Wednesday call ahead of a planned face-to-face meeting later this year.

In commodities, oil fell for the first time in three days after Iran confirmed it would hold negotiations with the US, easing the immediate risk of military strikes against the OPEC producer.

Corporate Highlights:

BNP Paribas SA reported unexpectedly high fourth-quarter profit and raised some mid-term financial targets as Chief Executive Officer Jean-Laurent Bonnafe seeks to prop up a stock that has long lagged peers. Nvidia Corp. is nearing a deal to invest $20 billion in OpenAI as part of its latest funding round, according to people familiar with the matter, marking the chipmaker’s single biggest investment in the ChatGPT developer. SpaceX held meetings with banks from outside the US for its IPO, according to people familiar with the matter, as Elon Musk’s rocket and satellite maker targets a listing this year on an ambitious timeline. Sony Group Corp. reported a surprise 22% improvement in profit after a challenging holiday quarter, raising its full-year outlook on the back of solid demand for its entertainment offerings. Siemens Healthineers AG missed expectations after currencies and tariffs weighed on sales of products such as MRI scanners. Volkswagen AG employees in Tennessee have secured a 20% across-the-board wage hike in a landmark deal with the United Auto Workers union. BBVA SA posted fourth-quarter profit in line with analysts’ estimates as higher income from lending offset a decline in fees and commissions. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 6:50 a.m. London time Nasdaq 100 futures rose 0.2% The MSCI Asia Pacific Index fell 1.2% Hong Kong’s Hang Seng fell 0.2% The Shanghai Composite fell 0.6% Euro Stoxx 50 futures fell 0.1% Currencies

The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.2% to $1.1789 The Japanese yen was little changed at 156.96 per dollar The offshore yuan was little changed at 6.9398 per dollar The British pound fell 0.3% to $1.3616 Cryptocurrencies

Bitcoin fell 2.7% to $70,690.7 Ether fell 2.1% to $2,080.86 Bonds

The yield on 10-year Treasuries was little changed at 4.27% Japan’s 10-year yield declined 2.5 basis points to 2.225% Australia’s 10-year yield declined one basis point to 4.86% Commodities

Spot gold fell 0.9% to $4,918.46 an ounce West Texas Intermediate crude fell 2% to $63.86 a barrel This story was produced with the assistance of Bloomberg Automation.

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