An accelerating sell-off of AI-linked shares has hit global markets, as fears over rising inflation and future interest rate hikes spooked traders already wary of the heavily indebted sector. South Korea’s benchmark Kospi 200 index, which is heavily skewed towards companies that make memory chips, fell more than 8% overnight to a six-month closing low, triggering circuit breakers that brought trading to a halt at various points.

Market Reactions

Some semiconductor stocks, such as SK Hynix and Samsung Electronics, plunged nearly 11% and 9.5%, respectively. The index closed at a six-month low, down 8.1%. Meanwhile, Japan’s Nikkei 225 dropped by 4.9% on Thursday, following an 11% slump in memory chip maker Kioxia and a 10% drop in SoftBank, a significant investor in ChatGPT owner OpenAI.

The falls followed a slide on Wall Street during the previous day’s session, where the Nasdaq Composite fell by 1.9% and the S&P 500 dropped 1.1%, logging its worst performance since July.

Inflation Concerns

The sell-off comes after US data showed inflation jumped to a higher than expected 3.7% in September, marking the fastest increase in prices since the consumer price index (CPI) rate hit a three-year peak of 4.2% in May. This figure has rattled investors who are now expecting fresh interest rate increases by the US Federal Reserve, with some pricing in another increase as soon as the end of the month.