The Nasdaq Composite is approaching a key technical support level as concerns about financing the AI investment boom spread across global technology markets. Hot US inflation data failed to lift Treasury yields, which kept falling.
The Nasdaq Composite declined 1.88% on Wednesday as concerns about how the AI infrastructure boom will be financed hit technology shares. The selloff then extended into Asia on Thursday, sending South Korea's KOSPI down 7.57% and Japan's Nikkei down 4.90%.
Even TSMC's record third-quarter profit failed to stabilize sentiment. Investors appear more concerned about the financing of the AI boom than about another round of strong US data.
CoreWeave, Oracle and Nvidia lead the AI selloff
CoreWeave has emerged as a particularly visible example. Its shares plunged approximately 15.5% on Wednesday, while yields on its 2031 and 2032 bonds reportedly approached 15%.
Oracle dropped 8.8% the same day. Nvidia lost 3.2%.
However, ActionForex says financing stress at individual AI-related companies is not yet evidence of a systemic credit crisis. Broader credit-market deterioration or reductions in hyperscaler investment plans would provide stronger confirmation.
Hot producer prices fail to stop the Treasury rally
Thursday's producer price index report offered little obvious reason for Treasury yields to fall further. Yet they did.
September headline PPI accelerated from 0.5% to 1.3% mom, against expectations of 0.5%. Core PPI jumped from 0.2% to 0.7% against forecasts of 0.3%.
The muted reaction suggests that defensive Treasury demand amid technology-sector selling is outweighing the upward pressure on yields that stronger inflation figures normally bring. The PPI surprise reportedly lifted the probability of an October Fed hike slightly to around 33%.
Nasdaq approaches its 55-day EMA
The index has fallen to approximately 26,693 after reversing from its recent 27,722.75 peak, putting its 55-day EMA near 26,586 in focus.
A sustained break below that level would strengthen the case for a medium-term top at 27,722.75, with 26,063.08 as the immediate downside objective. A strong rebound from the 55-day EMA, however, would preserve the near-term bullish outlook.
The US 10-year Treasury yield has already broken below 5.081% as its retreat from 5.365% accelerates. A simultaneous breakdown in the Nasdaq and in the 4.95–5.00% yield support region would strengthen the case that the AI credit scare is developing into a broader market correction.
Source: ActionForex
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