By Niket Nishant and Ankur Banerjee July 29 Global shares struggled to push higher on Wednesday as modest gains in the U.S. did little to soothe investors spooked by a punishing selloff in Asia, where unease over AI valuations has frayed nerves.
With sentiment towards AI-linked chipmakers turning sharply negative amid mounting fears over competition from China, investors now await earnings from tech heavyweights Microsoft and Meta, which will need to clear a high bar when they report later in the day
Expectations have become so lofty that even a sixfold jump in SK Hynix’s quarterly profit fell short, leading to a 9.61% drop in shares. “The selloff in chip stocks looks overdone, but volatility should be expected whenever the market finds reasons to question the durability of the AI cycle,” said Jake Seltz, portfolio manager for the Empiric LT Equity team at Allspring Global Investments. “Expectations were so high that good numbers have not always been enough.” South Korea’s KOSPI, which has become emblematic of the sharp swings in AI sentiment, fell nearly 6% a day after sinking more than 10% to a three-month low. Finance minister Koo Yun-cheol apologised on Wednesday that single-stock leveraged exchange-traded funds were introduced without careful consideration. The approval of the ETFs has been criticised as having led to increased volatility in the South Korean market.
The pan-European STOXX 600 benchmark was flat. On Wall Street, futures tracking the tech-heavy Nasdaq 100 and the benchmark S&P 500 rose 0.27% and 0.24%, respectively. The MSCI All Country World Price index dipped 0.14%, hovering close to its lowest level in a month.