Tech selloff deepens as Deutsche Bank flags broad-based US inflation

The International Monetary Fund warned earlier this week that the threat of an AI share-price correction rippling across global markets is putting world financial stability at risk.

“The consequences of an AI correction could be global,” the IMF said. Aside from the US, it added, Asian markets would be most exposed, with the UK and eurozone potentially more insulated — although investors with US holdings would be hit regardless.

The warning came as a sell-off of AI-linked shares accelerated across global markets, fueled by a higher-than-expected US September inflation reading.

South Korea’s benchmark Kospi 200 index, heavily weighted toward memory-chip producers, fell 8.1% overnight to a six-month closing low, triggering circuit breakers that brought trading to a halt at various points. Chipmakers SK Hynix and Samsung Electronics plunged nearly 11% and 9.5%, respectively.

Japan’s Nikkei 225 dropped 4.9%, dragged down by an 11% slump in memory-chip maker Kioxia and a 10% drop in SoftBank, a major investor in OpenAI, the company behind ChatGPT.

The losses followed Wednesday’s session on Wall Street, where the Nasdaq Composite fell 1.9% and the S&P 500 dropped 1.1% — its worst performance since July.

The September US Consumer Price Index reading of 3.7% year-over-year marked the fastest increase since the rate hit a three-year peak of 4.2% in May.

The figure has rattled investors, who are now pricing fresh interest-rate increases by the US Federal Reserve, with some punters pricing in another increase as soon as the end of the month.

“Markets have just had an incredibly tumultuous 24 hours, as a strong US CPI print was then followed up with mounting fears around the AI trade,” Deutsche Bank analysts led by Jim Reid said.

The inflation increase was not driven by energy costs, which have been pushed up by geopolitical tensions including the ripple effects from the US war on Iran. “This wasn’t just an energy surge driving prices higher, as there were broad-based moves across the consumer basket,” Reid said.

The jitters extended to China, where Shanghai’s CSI 300 slipped as much as 2.4%, marking its lowest level since August 2025. In Taiwan, TSMC — one of the world’s leading chip makers and Asia’s most valuable company — fell 2% despite reporting its sixth straight quarter of profits.

European stocks traded lower at the start of trading. The Stoxx 600 was down 0.4%, the UK’s FTSE 100 down 0.06%, France’s CAC 40 down 0.19%, Spain’s Ibex down 0.17%, and Germany’s DAX down 0.53%. In the US, stock futures pointed to further losses for tech stocks, with Nasdaq 100 futures dropping 1%.