Chip makers lead global selloff while oil jumps on Houthi pressure
Global equity markets fell on Monday as investors reacted to a weekend call from Anthropic chief executive Dario Amodei and other industry executives for a slowdown in artificial intelligence development. The selloff hit chip makers and AI-linked companies across the U.S., Europe, and Asia, while oil prices climbed separately on geopolitical pressure in the Middle East.
Amodei, the chief executive of artificial-intelligence developer Anthropic, published an essay over the weekend in which he warned against a race to the bottom in the development of new AI models, according to the Wall Street Journal. OpenAI leader Sam Altman and Elon Musk backed Amodei’s call to check the pace of AI development, the Journal reported.
The reaction in equity markets was sharp. Nasdaq futures fell 1.5% in early European trade, with chip makers leading the decline. Intel dropped 4.9% in premarket trade, while Micron and Marvell shed 4.4% and 5.5%, respectively. Nvidia dropped 2.2% premarket.
The selloff spread through Asian trading. South Korea’s Kospi index dropped 3.3% as mega-cap chip makers SK Hynix and Samsung Electronics lost more than 6% and 4%, respectively. Tokyo’s Nikkei was dragged lower by a more than 10% fall for SoftBank Group, a prominent OpenAI backer. European markets saw a sharp pullback in AI-linked stocks, with ASML, described by the Journal as Europe’s most valuable company, dropping more than 4%.
The market move reflected investor concern that a pause in AI’s advance would put the brakes on the boom in capital expenditure that has driven equity markets globally in recent years, according to the Journal’s reporting.
Oil prices moved in the opposite direction, climbing over the weekend as the advance of Iran-backed Houthi militants increased pressure on the Bab al-Mandeb Strait, a critical shipping lane between Yemen and Djibouti. A planned meeting between Iran and other Gulf states scheduled for Monday to discuss shipping routes was postponed, adding further pressure on prices. Brent crude traded close to $108 a barrel.
Treasury yields ticked lower in early European trade but remained elevated across maturities. Investors positioned for a likely Federal Reserve rate hike on Wednesday, with markets pricing an 86.8% likelihood of a quarter-point move, according to LSEG data cited by the Journal.
The prospect of higher U.S. rates strengthened the dollar and weighed on gold, which traded at around $4,360 a troy ounce. Bitcoin moved 1.1% higher to $77,630.
The Bank of England and Bank of Japan are scheduled to announce policy decisions on Thursday and Friday, respectively. The BOE is widely expected to hold rates, while the BOJ is expected to hike, the Journal reported. The European Central Bank raised its policy rate last week.
The combined moves showed how exposed global equity markets have become to two parallel pressures: the prospect of an AI development pause that could end the capital-expenditure boom supporting valuations, and renewed Middle East instability that could keep energy prices elevated as the Federal Reserve decides whether to raise rates.