Asian shares, precious metals and oil slumped sharply in a global market rout, as investors fretted about the outlook for US interest rates and the risk of an artificial intelligence bubble bursting.
Heavy selling swept through markets after US President Donald Trump announced his nominee to lead the Federal Reserve, unsettling investors already nervous about stretched valuations in AI-related stocks.
South Korea’s stock exchange was briefly halted after the benchmark Kospi plunged 5.3% to 4,949.67. Tech heavyweights bore the brunt of the sell-off, with Samsung Electronics falling 6.3% and chipmaker SK Hynix sliding 8.7%.
The Kospi had been setting record highs in recent weeks as technology stocks surged on the back of the AI boom, fuelled by partnerships involving major players such as Nvidia and OpenAI.
Markets also reacted to uncertainty over how Kevin Warsh, Trump’s nominee for Fed chair, might steer monetary policy. US equity futures fell sharply, with S&P 500 futures down 1.2% and Dow Jones Industrial Average futures off 0.9%.
A growing concern among investors is that the Federal Reserve could lose some of its independence under political pressure, a fear that had previously helped drive gold prices sharply higher and weaken the US dollar over the past year.
That trade has now reversed violently. Gold fell 5.8% in early Monday trading, while silver slumped 12.3%, extending Friday’s sharp pullback that ended a record-breaking rally in precious metals. Oil prices also came under pressure, with Brent crude down 4.5% at around $66 a barrel.
The rout followed a weak finish on Wall Street on Friday, when the S&P 500 slipped 0.4% to 6,930.03, the Dow Jones Industrial Average fell 0.4% to 48,892.47 and the Nasdaq Composite dropped 0.9% to 23,461.82.
