Wall Street got its technology bounce on Monday. Asia looked at it, shrugged, and sold its chipmakers anyway. South Korea’s KOSPI dropped about 3.5 per cent on Tuesday as memory makers took another beating, Tokyo slipped with SoftBank, and European futures are pointing lower before London opens. The message from Seoul is awkward for anyone who called Monday the turn: one good day for American chip stocks has not settled who gets paid in the AI buildout, and the memory makers are the ones being asked to blink first.
The 60-Second Market View
The overnight tone is cautious rather than panicked. The S&P 500 closed Monday up 0.41 per cent at 7,690.73 and the Nasdaq Composite rose 1.11 per cent to 26,430.89, while the Dow slipped 0.07 per cent to 51,966.03. The VIX eased to 18.44. Futures are calm, with S&P 500 futures up about 0.2 per cent near 7,746 and Nasdaq 100 futures flat near 29,730. Asia is a different picture. The KOSPI is down about 3.5 per cent near 5,563, the Nikkei is down about 0.9 per cent near 64,350, the Hang Seng is down about 0.9 per cent near 23,968 on its return from Monday’s holiday, Taiwan is off about 0.3 per cent and Australia about 0.6 per cent. Shanghai is close to flat.
In markets beyond equities, the dollar index is near 101.81, sterling near $1.333, the euro near $1.123 and the yen near 158.2 per dollar. The US 10-year Treasury yields about 5.13 per cent and the 10-year gilt about 5.43 per cent. Brent crude is near $109.70, just under Monday’s five-month high, and spot gold is near $4,144, still unable to get back through $4,200. European futures are lower, with Euro Stoxx 50 futures down about 0.7 per cent and FTSE futures down about 0.4 per cent.
The Big Story: Wall Street’s Chip Bounce Stops at Seoul
Monday in New York looked like relief. The Philadelphia Semiconductor Index rose about 1.6 per cent and snapped an eight-session losing streak, its longest in years, as buyers came back to the AI names that had been hammered the week before. But the bounce was narrow. Outside the AI leaders, breadth was poor and the Dow finished lower. As Pepperstone’s Chris Weston put it in a note, covering shorts is very different from having the conviction to rebuild aggressive exposure to AI.
Seoul is where that difference showed up. SK Hynix fell more than 5 per cent, Samsung Electronics about 2.6 per cent and SK Square more than 6 per cent, with the technology-heavy Kosdaq down more than 4 per cent. The pressure follows reports that large US technology customers, including Apple and Tesla, are pushing for lower memory prices and pointing to Chinese suppliers CXMT and YMTC as alternatives. The KOSPI had already fallen more than 17 per cent in the first half of October, the steepest drop among major markets, so this is not a one-day wobble. The day’s debut added to the mood: South Korean AI data-centre firm Elice opened 16 per cent below its IPO price and at one point was down as much as a third, a cold reception for a deal that had been heavily oversubscribed.
Why does this matter in London? Because it shifts the AI question from whether demand is real to who keeps the margin. Last week’s sell-off was about how the buildout gets financed. This morning’s version is about pricing power along the chain. If the biggest buyers of memory can use Chinese capacity to lean on Korean suppliers, the profits investors had pencilled in for those suppliers look less safe, even while spending on AI keeps climbing. Goldman Sachs expects the five big AI spenders to lift combined capital expenditure to about $1.2 trillion next year, which tells you the money is still flowing. What is changing is the market’s view of where it lands.
Tokyo carried a related worry. SoftBank fell about 5 per cent after reports that it is in talks to take part in OpenAI’s latest private funding round, which keeps the circular nature of AI funding in the headlines. In China, losses were cushioned by support measures, with the securities regulator approving 18 actively managed ETFs and the People’s Bank of China leaving its loan prime rates unchanged.
What to watch: whether SK Hynix and Samsung stabilise through the European session, whether European chip names follow Seoul lower at the open, and how Netflix sounds after the US close tonight. The bigger AI test arrives with Meta on Wednesday.
What Happened Overnight?
Wall Street ended Monday higher on the back of technology. Memory and storage names led the rebound in New York, a nice irony given what happened to their Korean peers a few hours later. The S&P 500 rose 0.41 per cent and the Nasdaq 1.11 per cent, but the Dow’s small loss and weak breadth said the move was concentrated rather than broad. The VIX fell almost 8 per cent to 18.44, which takes the edge off last week’s fear without removing it.
Asia then failed to follow. The MSCI Asia ex-Japan index fell close to 1 per cent according to Reuters, with Korea doing most of the damage. Hong Kong returned from its Chung Yeung holiday lower. Australia slipped as gold miners tracked the softer metal.
Away from markets, France set curfews in parts of several cities, including Paris, Lille and Nice, after a weekend of riots and looting linked to nationwide anti-government protests. In the Middle East, Yemen’s Iran-aligned Houthis said they attacked Saudi energy, airport and military targets on Monday, including an Aramco site at Yanbu and the Shaybah oilfield. Saudi authorities had not confirmed the claims and Reuters said it could not verify them independently.
FX
The dollar is steady to slightly softer. The dollar index is near 101.81, down about 0.2 per cent. Sterling is near $1.333 ahead of this morning’s UK jobs figures, the euro near $1.123 and EUR/GBP near 0.842. The euro has been surprisingly resilient given the scenes in France, which suggests traders are pricing French risk into French assets rather than treating it as a eurozone-wide problem, at least for now. USD/JPY is near 158.2, still close enough to the levels that keep Tokyo’s intervention warnings in the conversation. The pound’s next move probably comes from wages at 07:00 rather than anything overnight.
Equities
The FTSE 100 fell 1.08 per cent on Monday to 10,764.69, and Europe more broadly missed out on Wall Street’s bounce as banks were hit by worries over French debt and street unrest. Futures point to another soft start, with FTSE futures down about 0.4 per cent and Euro Stoxx 50 futures down about 0.7 per cent. European semiconductor stocks are the obvious place for Seoul’s selling to spread. In London, Anglo American updates on third-quarter production this morning, which matters for a mining-heavy index, and ABB reports in Zurich. In the US, General Motors, GE Aerospace, Northrop Grumman and RTX report before the bell, with Netflix, United Airlines and Capital One after the close.
Bonds
Yields remain high and steady. The US 10-year is near 5.13 per cent, the 2-year near 4.76 per cent and the 30-year near 5.46 per cent. In the UK, the 10-year gilt is near 5.43 per cent, up from about 5.37 per cent at the end of last week, and the 2-year near 4.93 per cent. That two-year level matters because it reflects how seriously the market takes the chance of a Bank of England rate rise on 5 November. France’s 10-year yield is near 4.94 per cent against Germany’s near 3.46 per cent, and that gap is the cleanest gauge of how much French political risk is being priced. Japan’s 10-year is near 2.9 per cent.
Commodities
Oil is back near the top of its range. Brent is near $109.70 after touching $110.70 on Monday, its highest since 20 May, before settling at $109.55. The market is weighing two pulls at once. Unverified Houthi claims of attacks on Saudi energy sites keep the supply-risk premium high, while President Trump’s executive order waiving some Russia-related sanctions and tariffs, which he then said was not yet a final decision, pulls the other way. The November WTI contract expires today, so the headline WTI price near $104 is thin and less useful than the December contract, which settled near $98.50. Goldman Sachs has set out a scenario where Brent reaches $120 if attacks on shipping escalate, and one where it falls towards $80 if exports return to normal. Spot gold is near $4,144 and silver near $57.65. Gold has repeatedly failed around $4,200, and high real yields are not helping it.
Today’s Economic Calendar
07:00 — UK labour market report — Consensus has unemployment holding at 4.9 per cent and employment up about 20,000. Pay growth is the part the Bank of England cares about most, with a rate rise on 5 November still being debated.
07:00 — Anglo American third-quarter production and ABB results — A read on mining output and industrial demand for two heavyweights in London and Zurich.
10:00 — German ZEW investor sentiment — A gauge of whether French unrest and high energy prices are denting confidence in Europe’s biggest economy.
Later today — Bank of England’s Megan Greene speaks at the London School of Economics; ECB policymakers Martin Kocher and Olli Rehn also speak — Greene has warned that pay settlements of about 3.5 per cent are too high for comfort, so her tone straight after the jobs data could move the pound.
Around 11:30 to 12:00 — General Motors, GE Aerospace, Northrop Grumman and RTX results — A read on the US consumer, aviation and defence demand before Wall Street opens.
13:30 — US housing starts and building permits for September — Another check on how higher borrowing costs are hitting the US housing market.
21:01 — Netflix third-quarter results — The first of the big-name tech reporters this week; United Airlines and Capital One also report after the close.
Tomorrow — UK consumer prices and public finances at 07:00, then Meta after the US close — Two events that could set the tone for the pound and for the AI trade respectively.
Levels Traders Are Watching
These are reference points, not predictions. The KOSPI near 5,563 has the 5,500 round number just below, and a break there would confirm Seoul’s sell-off is still running. S&P 500 futures near 7,746 have 7,700 underneath and 7,800 above. The Nikkei near 64,350 has 65,000 overhead. The US 10-year yield near 5.13 per cent has 5.20 per cent above and 5.00 per cent below, while the 10-year gilt near 5.43 per cent has 5.50 per cent as the nearby marker. GBP/USD near $1.333 has $1.33 as the line to hold after the jobs data, EUR/USD has $1.12 below and USD/JPY near 158.2 has 159 above. Brent near $109.70 has Monday’s $110.70 high above and $105 below. Spot gold near $4,144 has $4,100 below and $4,200 as the ceiling it keeps bumping into.
A Bounce That Only Travelled So Far
The balanced read this morning is cautious. Monday’s rebound in US chip stocks was real, but it was narrow, and the first market to test it overnight sold its own chipmakers hard. That points to a market that is still sorting AI winners from AI suppliers rather than buying the whole theme back. Add oil near five-month highs, gilt yields creeping up again and riots in France, and Europe has little reason to open with confidence.
What would change the view? A stabilisation in SK Hynix and Samsung through the day, European chip stocks shrugging off Seoul, and a clean Netflix update tonight would suggest Monday’s relief has more to give. On the other side, a KOSPI break below 5,500, Brent pushing through $110.70, or hot UK pay figures that lift gilt yields again would argue the bounce was borrowed. The markets worth watching are the KOSPI and Korean memory stocks, Brent, GBP/USD around the jobs data, the 10-year gilt and Nasdaq 100 futures into the New York open.
The opportunity on a morning like this is to notice where the story is changing rather than react to the price. The AI trade is no longer one trade, and the gap between who spends and who supplies is where the next moves are likely to come from. The risk is assuming that a good day on Wall Street means the rest of the world is on board. For anyone newer to markets, the takeaway is simple: a rally that only one market joins is worth questioning before you trust it. If you want an honest view of how your own trading holds up when markets disagree with each other, take the free Trader Assessment and see where your process is strong and where it needs work.
