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World Shares Mostly Decline on AI Sales08/19 05:11
Shares declined in Europe and Asia on Wednesday as artificial
intelligence-related stocks were hit by heavy selling.
BANGKOK (AP) -- Shares declined in Europe and Asia on Wednesday as
artificial intelligence-related stocks were hit by heavy selling.
Germany's DAX shed 0.2% to 26,085.69, while the CAC 40 in Paris rose 0.3% to
8,532.16. Britain's FTSE 100 slipped 0.2% to 10,707.36.
The futures for the S&P 500 and Dow Jones Industrial Average were nearly
unchanged.
South Korea's Kospi led the declines in Asia, dropping 5.8% to 6,471.17. The
two biggest Korean companies benefiting from the AI boom tracked losses for
their U.S. rivals. Samsung Electronics shed 7.8%, while memory chipmaker SK
Hynix tumbled 9.8%.
In Tokyo, the Nikkei 225 sank 3.2% to 65,326.42 as worries over rising bond
yields coupled with selling of tech shares pulled the benchmark lower.
The yield on 10-year Japanese government bonds has been trading near a
three-decade high of over 2.9% due to expectations that the Bank of Japan will
soon raise its benchmark rate to counter inflation.
The Shanghai Composite index shed 2.4% to 3,894.42. Shares in Chinese
humanoid robot maker Unitree soared nearly 630% initially in their trading
debut on the Shanghai Stock Exchange's Nasdaq-like STAR market. The company
reaped about $900 million with its initial public offering. Its shares closed
460% higher.
Shares in UBTech, another major Chinese humanoid robot maker, whose stock is
traded in Hong Kong, fell 10.7%.
The Hang Seng in Hong Kong rose 0.1% to 25,495.07.
Taiwan's Taiex fell 1.3%, and Australia's S&P/ASX 200 slipped 0.2% to
9,053.80.
Apart from renewed jitters over criticism that AI-related stocks have shot
too high, rising oil prices have been clouding market sentiment.
Crude prices have been swinging sharply due to uncertainty about when and
whether the United States and Iran can reach a deal to allow oil tankers to
exit the Persian Gulf freely again. Brent was going for $72.87 per barrel just
before the start of the war.
Brent crude, the international standard, gained 0.8% to $91.78 per barrel.
U.S. benchmark crude oil gained 1% to $84.86 per barrel
On Tuesday, Wall Street pulled further from its all-time high. The S&P 500
fell 0.7% for a third straight modest loss. The Dow industrials dipped 0.2%,
and the Nasdaq composite sank 1.3%.
Stocks that have been big winners in the boom around AI technology led the
decline. They've been veering up and down this summer on worries that their
prices have shot too high and that the strong demand for memory, processors and
other building blocks of data centers may fizzle if AI proves less profitable
than promised.
Micron Technology dropped 7%, and the seller of computer memory was one of
the heaviest weights on the S&P 500. So were chip companies Nvidia, which fell
2.3%, and Broadcom, which sank 3.2%.
Bond yields have been another concern. They have jumped since the war began
because high oil prices are pushing inflation higher. That adds to worries over
huge debt loads for governments, while surging borrowing keeps yields high.
The yield on the 10-year U.S. Treasury edged down to 4.70% from 4.72% late
Monday but remains well above its 3.97% level from just before the war with
Iran began. The 30-year Treasury yield also ticked lower but is still near its
highest level since 2007.
When bond yields are high, investors are less willing to pay high prices for
stocks and other kinds of investments, particularly those seen as the most
expensive.
High yields have already sent the average long-term U.S. mortgage rate near
its highest level in a year, which has hurt the housing industry. They also
could slow borrowing by Big Tech companies to pay for data centers, threatening
a big source of growth for the U.S. economy.
In other dealings early Wednesday, the U.S. dollar fell to 159.11 Japanese
yen from 159.61 yen. The euro rose to $1.1607 from $1.1577.
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