Asian equity markets collapsed on Tuesday, October 13, 2026, with the MSCI Asia-Pacific ex-Japan index shedding more than 2% to hit its lowest level since late July. The selloff was triggered by a wave of panic across artificial intelligence and semiconductor stocks, pushing investors into US Treasuries.
🔑 In brief
- MSCI Asia-Pacific ex-Japan index drops more than 2%, lowest since late July
- South Korea’s KOSPI plunges more than 6%, its worst session since July
- Samsung -8%, SK Hynix -10%, Kioxia -14%, SoftBank Group -8%
- US 10-year Treasury yield eases to 5.193%, after touching a 24-year high of 5.364%
- CME FedWatch: 80.6% probability of a Fed pause in October, up from 51% a month ago
Quake hits Asian semiconductor stocks
The shock originated in East Asia, the global epicenter of chip manufacturing. South Korea’s stock market, where Samsung and SK Hynix — two pillars of DRAM (dynamic random-access memory) and NAND (flash memory) — are listed, posted its worst session since July, with the KOSPI plunging more than 6%. In Japan, the Nikkei 225 lost 2.6% after returning from a public holiday, while Taiwan shed 2% when trade resumed.
Leading chipmakers were hit hardest by the wave of selling:
| Company | Country | Session move |
|---|---|---|
| Samsung Electronics | South Korea | -8% |
| SK Hynix | South Korea | -10% |
| Kioxia Holdings | Japan | -14% |
| TSMC | Taiwan | -1.8% |
| SoftBank Group | Japan | -8% |
| CXMT | China | as much as -5.3% |
China’s move appeared to act as the trigger. ChangXin Memory Technologies (CXMT) fell as much as 5.3%, touching its lowest level since its July IPO. According to several analysts, reports of rapid progress at this Chinese DRAM manufacturer revived fears that Beijing could close its technology gap faster than expected, threatening the margins of established South Korean and Japanese players.
“Less forgiving” market for the AI trade
Beyond the China file, the very credibility of the AI cycle is now being questioned. Charu Chanana, Chief Investment Strategist at Saxo in Singapore, summed up the ongoing shift:
“CXMT news appears to have been a clear trigger for the memory selloff, but the broader story is that investors are becoming far less forgiving of the AI trade. They are questioning not only AI demand growth, but also the sustainability of current profits and margins in the face of rising competition.”
Charu Chanana, Chief Investment Strategist at Saxo (Singapore)
This skepticism is hardly isolated. On Monday, Broadcom CEO Hock Tan warned that the AI boom was attracting investors whose strategies resembled “gambles”. The previous week, billionaire Ray Dalio described AI as a “classic bubble” nearing a breaking point, against a backdrop of rising interest rates and a growing need to convert wealth into cash.
Hideyuki Ishiguro, Chief Strategist at Nomura Asset Management, also noted that the rise in bond yields could slow fundraising for AI-related vehicles and capex (capital expenditure) on data centers, while valuations remain stretched.
Oil and geopolitics add to the caution
The risk-off tone on Asian assets was reinforced by rising energy prices. Brent crude futures (the North Sea benchmark) traded at $105.9 a barrel, close to a two-week high, fueled by tensions in the Middle East and the fragility of the Russia-Ukraine truce.
“Markets are rediscovering that geopolitics matters most when it fuels inflation. The renewed surge in oil keeps pressure on yields and takes some of the shine off expensive growth stocks, especially since the energy truce between Russia and Ukraine looks fragile and Middle East supply risks remain in play.”
Charu Chanana, Saxo Markets
In FX, the US dollar benefited from the move. The euro traded at 1.1173 and the yen at 158.34 per dollar, a classic rotation toward safe-haven currencies in times of uncertainty.
US Treasuries regain favor with investors
In this risk-off climate, US government bonds found buyers. The yield on the benchmark 10-year Treasury note fell 5 basis points (a hundredth of a percentage point) to 5.193%, moving away from last week’s 24-year high of 5.364%. The move offered some breathing room to equity markets after several weeks of pressure on long-term yields.
For Charu Chanana, this yield pullback is nonetheless “a tactical bounce rather than a sustainable trend change”. Sticky inflation, elevated oil prices and heavy public borrowing remain structural headwinds to a durable decline in long-term yields.
Traders now look to Wednesday’s US inflation data for fresh clues on the Federal Reserve’s path. According to the CME FedWatch tool, which aggregates fed funds futures pricing, markets now imply an 80.6% probability of a Fed pause in October, up from just 51% a month earlier.
Earnings season and the inflation print: two pivotal events
This week also marks the start of the US earnings season, with investors looking to gauge the impact of higher yields on M&A activity, loan growth and bank funding costs. On Tuesday, Goldman Sachs, JPMorgan Chase, Citigroup and Wells Fargo report results, followed on Wednesday by Bank of America and Morgan Stanley.
Anthony Saglimbene, Chief Strategist at Ameriprise Financial, framed the stakes:
“Q3 earnings season begins with stocks near record highs and little room for disappointment. We believe that, for equities to have a chance to push higher, US companies must deliver solid results and show they can sustain that momentum through year-end.”
Anthony Saglimbene, Chief Strategist at Ameriprise Financial
For Jason Pride, Head of Investment Strategy and Research at Glenmede, this week’s Consumer Price Index (CPI) report will be “probably the most important data publication the Fed will see before its October meeting”. A hawkish surprise would risk reigniting pressure on Asian and US growth valuations, while an easing in the oil front would, conversely, give some air to tech and chip names.
Sources
- TradingView / Reuters
- Yahoo Finance
- Investing.com
- Briefs.co
- Global Banking and Finance
- Euronext Live
This article is published for informational and educational purposes. It does not constitute investment advice. Always do your own research (DYOR) before making any decision.
