AI Investment Burden and Interest Rate Uncertainty Combine
As controversy over an artificial intelligence (AI) bubble in the U.S. market spreads rapidly, stock markets in South Korea, Japan, and Taiwan all failed to avoid a downward trend.
On November 21, the KOSPI index closed at 3,853.26, down 3.79% from the previous session. Shares of Samsung Electronics fell by 5.77%, while SK Hynix dropped by 8.76%. The KOSDAQ index also declined by 3.14%.
Japan's Nikkei 225 average closed at 48,625.88, down 2.4%. Taiwan's TAIEX ended the session at 26,434.94, down 3.61%. The Shanghai Composite Index (-2.45%), the Shenzhen Composite Index (-3.43%), and the Hong Kong Hang Seng Index (-2.38%) also closed lower.
In the New York market, which closed earlier, the Dow Jones Industrial Average fell by 0.84%, the S&P 500 index by 1.56%, and the tech-heavy Nasdaq index by 2.15% compared to the previous session. Notably, the Nasdaq index saw an intraday swing of up to 5% from its high to low. This is the largest intraday fluctuation since April 9, when volatility surged after President Donald Trump announced reciprocal tariffs.
Startups and hyperscalers related to AI are making massive investments by even resorting to external borrowing to expand AI infrastructure, raising doubts in the market about whether such capital expenditures can generate sufficient returns. In addition, uncertainty over the U.S. Federal Reserve's interest rate policy path has heightened investor anxiety.
According to the CME FedWatch Tool at the Chicago Mercantile Exchange, the federal funds futures market reflected a 65% probability that the benchmark interest rate will remain unchanged at next month's Federal Open Market Committee (FOMC) meeting, and a 35% probability of a 0.25 percentage point cut. The probability of a rate freeze fell by 5 percentage points from the previous day.
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