The biggest sell-off in the U.S. since July has spread to Asia. Investors are awaiting TSMC's earnings report

A sharp sell-off of tech stocks in the U.S. spilled over to Asian stock markets on the morning of October 15. After the market opened, South Korea’s KOSPI fell more than 7%, Japan’s Nikkei more than 4%, and Taiwan’s Taiex 3%, according to Nikkei Asia.

Shares of South Korea’s SK Hynix, Nvidia’s main supplier of memory chips, plummeted by more than 11%; those of Japan’s Kioxia fell by 11.4%; and those of equipment supplier Tokyo Electron dropped by 7.2%. The panic in Asia spread beyond the tech sector, notes Nikkei: shares of South Korea’s largest automaker, Hyundai Motor, fell more than 6%.

On October 14, Wall Street experienced its worst day since July: the Nasdaq technology index fell 1.9%, and the S&P 500—a barometer of the U.S. economy—dropped 1.1%. The PHLX Semiconductor Index, which tracks semiconductor companies, lost 4.3%.

U.S. inflation data triggered the stock sell-off. The core Consumer Price Index, which excludes food and energy, rose 0.3% in September from the previous month, instead of the expected 0.2%. This has heightened expectations that the Fed will raise interest rates as early as October, according to The Wall Street Journal. In September, the central bank raised rates for the first time in three years, but investors had since expected a pause, the publication notes.

Rising borrowing costs threaten to curb investment in AI infrastructure and increase credit risks, explains Nikkei. The shares of companies that have been actively borrowing money to build data centers and intend to continue taking out loans have fallen the most, the WSJ notes.

Shares of CoreWeave, a provider of cloud computing power for AI, fell by more than 15%, while the yield on its bonds maturing in 2032 jumped to 15%, according to Nikkei. The decline in CoreWeave’s bond prices reflects investors’ concerns about the company’s credit quality, the WSJ notes. “Although the initial sell-off was triggered by stronger-than-expected consumer price growth, the technology sector was the main driver of today’s decline,” JPMorgan analysts wrote about the trading session on October 14 (quoted by Reuters).

Operating profit at Samsung, the world’s largest memory chip manufacturer, rose nearly ninefold year-over-year in the third quarter, but its stock fell 10% on the morning of October 15, according to Nikkei. ASML, a key supplier of equipment for manufacturing AI chips, stated that it would not be able to fully meet demand in 2027–2028, and that customers are already inquiring about orders for 2029–2030, but even this could not prevent a sell-off in the sector.

Investors are now awaiting the earnings report from TSMC, the world’s largest custom chip manufacturer: as Nikkei notes, the key question of this earnings season is whether strong results will be able to dispel market concerns. TSMC’s stock fell 2% on the morning of October 15.

A consensus forecast based on estimates from 16 analysts suggests that TSMC’s net income for the third quarter will rise 65% to 746.3 billion New Taiwan dollars ($23.4 billion), according to LSEG data cited by Reuters. If these expectations are met, the company will set a record for quarterly profit for the sixth consecutive time.

This article was AI-translated and verified by a human editor