Global Tech Selloff, Fed Signals and Oil Market Volatility
Global equities extended their selloff across Asia as concerns over tighter US regulation of artificial intelligence and data-centre investment weighed heavily on technology stocks. The MSCI Asia Pacific Index fell 3.8%, while Japan’s Nikkei 225 plunged 5.8%, marking its biggest one-day decline since April 2025. South Korea’s Kospi dropped as much as 8.8%, triggering a circuit breaker, with Samsung Electronics and SK Hynix both losing more than 5%. Taiwan’s benchmark also fell 4.5%, entering bear-market territory.
The pressure followed growing concerns that the Democratic sweep of the US Congress could constrain the AI industry's expansion through tighter regulation. The Philadelphia Semiconductor Index has fallen almost 16% this week, putting it on track for its worst weekly performance since April last year. President Donald Trump blamed Democrats for losses in Americans' 401(k) portfolios as technology and AI-related stocks continued to decline.
Regional authorities moved to contain the selloff. South Korea temporarily relaxed collateral requirements for brokerages to limit forced selling, while Taiwan's financial regulator was expected to announce stabilisation measures. Markets subsequently recovered some ground, with Nasdaq 100 futures rising 0.8%.
Federal Reserve officials also offered a more measured assessment of the US economy. New York Fed President John Williams described economic growth as stronger and the labour market as remarkably stable, noting that wage growth remains consistent with the Fed's 2% inflation objective. He added that inflation expectations remain well anchored and that the effects of tariffs have largely worked their way through the economy. With energy prices passing through to inflation as expected and the economy facing unusual supply and demand shocks, Williams said it was appropriate to gather more information before making further policy decisions.
Bond markets reflected the broader risk-off environment. Chinese 10-year government bond yields fell to a record intraday low amid strong demand for safe-haven assets and ample liquidity. Japanese government bonds also advanced, tracking gains in US Treasuries, while the dollar strengthened against all Group-of-10 currencies.
Oil markets remained volatile. Brent crude rose 1.4% to $99.70 a barrel after gaining 3.9% in the previous session, although it remained on course for its largest weekly decline since April 2020. Investors continue to assess the possibility of an end to the months-long Middle East conflict and its implications for global energy supplies. The Persian Gulf remains central to the outlook, with diplomatic progress potentially easing supply concerns while renewed escalation could quickly drive prices higher.
Elsewhere, Canadian Prime Minister Mark Carney reaffirmed plans to use government borrowing and increased tax revenues to stimulate investment and expand the country's productive capacity.
Markets have experienced a sharp shift in sentiment this week, moving from optimism over potential geopolitical de-escalation to renewed concerns about AI valuations, regulation and global growth. The combination of technology-sector weakness, changing expectations for monetary policy and uncertainty surrounding the Persian Gulf continues to drive volatility across equities, bonds, currencies and commodities.
FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.
FISG — Interstellar Group
