Global Stocks Sink on Renewed AI Jitters
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What is the main topic discussed in this episode?
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Pro's number one most trusted app, based on August 2025 proprietary survey. global stocks sink on fresh investor concerns about a potential AI bubble.
The South Korean market down 8% today. That is a reflection really of what investors expect about AI globally because these South Korean chip companies are serving a global market.
Plus, the latest from Tel Aviv as Israel and Iran exchange fire for the first time in months. And an aviation trade group warns that a number of airlines may not survive the high energy prices brought on by fighting in the Middle East. It's Monday, June 8th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Global markets are sliding today following Friday's Wall Street rout that saw the Nasdaq fall by more than 4%. Today, Japan's Nikkei was dragged lower by electronics and metal stocks, while trading of South Korea's Kospi Index was halted twice in order to reduce volatility after it briefly fell more than 8% thanks to big declines by chipmakers Samsung and SK Hynix.
Peter Landers is The Wall Street Journal's Asia business, finance and economics editor and joins me now from Singapore. Peter, help make sense of what has set this off. There was, of course, a stronger than expected jobs report back on Friday that could play some role in it, leading people to believe the Fed. might be raising rates this year. And then two days before, on Wednesday afternoon, we had chipmaker Broadcom release earnings, saying that revenues were up, but it held its guidance for 2027 flat, which evidently sparked concerns that chip demand may not be trickling through to higher profit margins. Is that enough to get us to where we are now?
I think there's extraordinary sensitivity in the markets as to whether there is an AI bubble or not and how fast AI is going to keep growing. We know it's growing super fast and companies like NVIDIA or TSMC, SK Hynix, all of these companies that are connected to the AI boom. are seeing extraordinary rises in sales and profits. So that's great. The only question is, how quickly will profits continue to rise in the next couple of years? And any hint that the rise may not be quite as rapid as expected can have a big impact on the market because the prices right now are reflecting anticipation that the growth will continue to be incredibly rapid for a long time.
And just give us the logic on the jobs report, kind of the thinking here that potential rate hikes this year could put pressure on multinational companies in particular. What's happening?
Right. If the Federal Reserve did raise interest rates, it might reduce investment perhaps in AI or just send a shutter through the economy that would bring growth down generally and perhaps cast a chill over the AI boom.
Why are global stocks sinking amid AI concerns?
And again, anything that affects those growth forecasts really has the market on edge.
Something potentially like Wednesday's U.S. inflation report or on the AI narrative, what's bigger than SpaceX's IPO coming up on Friday?
Right, and the IPO on Friday certainly will be a barometer of how much investors think this field is going to grow in coming years because right now SpaceX doesn't have the kind of revenues that a company like Apple or Amazon does, nothing like that, nothing close to that. If you buy into a trillion dollar plus valuation for SpaceX, you are expecting amazing growth to continue for a long time. And it may well do that. And I think the IPO will be a test of what investors expect.
What impact does the South Korean market have on global investor sentiment?
That's the journal's Peter Landers. And to round out a busy week, the European Central Bank is set to announce its next rate decision on Thursday with a hike likely.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–3:25
2
Why are global stocks sinking amid AI concerns?
3:25–4:09
3
What impact does the South Korean market have on global investor sentiment?
4:09–10:27
4
How does the latest jobs report influence market expectations?
10:27–13:19
5
What are the implications of a potential AI bubble?
13:19–13:35
Speakers
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