Sell-off in US chip stocks drags down Asia-Pacific markets; Korean stocks trigger circuit breaker, SK Hynix drops 7%, oil prices continue to fall, gold remains above 4000.

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Investor concerns about the overvaluation of artificial intelligence (AI) concept stocks have triggered a dramatic sell-off of chip stocks on Wall Street, a panic that quickly spread to Asia-Pacific markets. In early trading, Asia-Pacific stocks were generally under pressure, with Korean stocks being particularly hard hit and triggering a circuit breaker. Meanwhile, dovish signals from the Federal Reserve and a continued drop in international oil prices are reshaping global market risk appetite.

The sell-off in Asia-Pacific markets intensified quickly in early trading. Korea's KOSPI opened down 4.5%, with intraday losses expanding rapidly to over 6%, falling below the 7,800 point mark. With KOSPI 200 futures plunging 5%, the Korean exchange invoked a circuit breaker, pausing program trading for five minutes. Leading chip stocks followed the overnight slump of US tech stocks and led the market lower, with SK Hynix plunging 7.6% at the open and Samsung Electronics dropping 6.5%.

The decline wasn't limited to Korea. The Nikkei 225 opened down 0.6% and intraday losses expanded to 2%. The MSCI Asia-Pacific Index overall fell by 1%. The immediate trigger for this regional plunge was the overnight turmoil in the US markets; on Wednesday, the US Semiconductor Stock Index plunged 6.3%, and S&P 500 futures continued to fall 0.2% in Asian trading.

Meta’s strategic shift overnight was the core catalyst behind yesterday’s US stock market decline. Meta's plan to sell excess computing power shattered the belief in "absolute scarcity of computing power," its stock soaring 10% in a single day for its best performance of the year, while chip and other AI hardware suffered heavy losses.

While stock markets were under pressure, macro fundamentals appeared to soften on the margin. The latest speech by Fed Chair Kevin Warsh significantly reduced market concerns regarding a rate hike in the near term. Meanwhile, progress in Middle East peace talks led to a rapid decline in international oil prices, providing support to ease global inflationary pressures.

Meta’s strategic shift to sell "excess computing power" becomes the core catalyst for chip stock plunge

According to Bloomberg, Meta is forming a new business unit to sell its surplus computing capacity to external clients for revenue. This strategic pivot breaks the market’s core belief in the "absolute scarcity of computing power," signifying that tolerance for unrestrained capital spending by tech giants is reaching a turning point.

This news triggered extreme polarization in the secondary market. Meta, which proactively signaled cost-cutting, surged 10% in a single day, marking its best performance of the year; while traditional AI hardware beneficiaries—semiconductor giants, memory chip makers, and emerging cloud service providers—suffered heavy losses. Star stocks like Nvidia and Micron faced fierce sell-offs, directly causing a full-scale breakdown of momentum strategies.

Wall Street institutions generally interpret this as a major narrative shift in the AI investment cycle. Goldman Sachs warned that the market's core premise has always been computing power scarcity, and once supply increases with rental prices dropping, the shortage narrative will be directly overturned, with hardware facing the pain first. Capital focus is rapidly shifting from simple hardware infrastructure construction to the stability of free cash flow and computing power utilization of enterprises, and investors are rewarding tech giants showing financial discipline with real money.

AI valuation concerns reshape market logic. According to Bloomberg, the market is increasingly worried that AI-driven stock rises have deviated from fundamentals. This sentiment erupted on Wall Street overnight, directly dragging down the stock markets of Asian economies highly dependent on chip exports.

On the inflation front, the Bank of Korea’s latest morning statement indicated that July’s CPI inflation rate will ease compared to June.

However, the central bank also warned that inflation is expected to remain high for some time. The marginal reduction in domestic inflation pressure failed to resist the direct impact of external tech stock sell-off on capital markets.

Warsh releases dovish signal, July rate hike expectations cool

Amid stock market turbulence, the Fed’s policy trajectory has become a key stabilizer of market sentiment. Fed Chair Warsh stated at the annual ECB forum in Sintra, Portugal, that inflation expectations have eased in the past month, and price risks have decreased in recent weeks. He reiterated the determination to restore inflation to the 2% target.

The market interpreted this as a sign the Fed is not in a hurry to raise rates. Evercore’s Krishna Guha commented: "At least, his remarks did not add fuel to speculation about a rate hike in July. In our view, this indicates the new Fed chairman currently sees no immediate reason to hike, though he keeps all options open for each meeting."

Resilience in US economic data also supports the market. US manufacturing expanded for the sixth consecutive month in June, and cost surges due to wars have eased. Printing, electrical equipment, and textiles led gains, while paper, furniture, and wood products contracted.

Raymond James Chief Economist Eugenio Aleman said: "Overall, the report shows manufacturing continues to be resilient, supporting our view that the US economy is reaccelerating, and growth this year is still expected at about 2.4%."

Currently, the market’s attention is shifting to Thursday’s US jobs report. Barclays Private Bank and Wealth Management Chief Market Strategist Julien Lafargue noted, since Warsh prioritizes inflation, June nonfarm payroll data "is unlikely to alter rate expectations on its own." He added that World Cup-related hiring is expected to distort the numbers.

International oil prices fall sharply

The continued decline in crude oil prices is providing some breathing space for global markets. Brent crude fell 0.8% to $71 a barrel, its lowest since the end of February when US and Israeli attacks on Iran occurred. WTI crude also fell 1.1% to $67.80 a barrel. Trump commented publicly: "Oil prices are falling rapidly."

The core driver for lower oil prices comes from positive progress in Middle East geopolitics. Bloomberg quoted senior US government officials saying American negotiators Steve Witkoff and Jared Kushner had productive discussions in Qatar, technical talks with Iran are advancing, and all parties are working to turn temporary peace agreements into permanent solutions to end the war.

IRNA, Iran’s official news agency, quoted Deputy Foreign Minister Kazem Gharibabadi as saying that Tehran has set up a working group to discuss the current agreement’s implementation and negotiate a final peace deal, although no meetings have yet been held.

Jefferies’ Mohit Kumar commented: "We are optimistic on the geopolitical front. That’s not to say a comprehensive deal will be reached—it may be more of a compromise. But as long as the strait stays open and oil continues to flow, markets may become less sensitive to geopolitics."

In addition, gold remained stable above 4000, rising slightly by 0.3%.

Tech giants accelerate strategic adjustment

Against the backdrop of macro and industry shocks, global tech giants are also accelerating changes in business layouts.

Global memory chip shortages have forced Apple to raise prices across its product lines. Meanwhile, Meta is formulating plans for a cloud infrastructure business and will offer access to AI computing power and models, putting it in direct competition with industry leaders like Amazon, Microsoft Azure, and Google Cloud.

Additionally, Google was ordered to pay nearly $2 billion to Klarna Group Plc's Pricerunner division for abuse of power in the comparison shopping service market.

Risk Warning and DisclaimerThe market carries risk; investing must be cautious. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific situation. Investment based on this is at your own risk. ```