Global Markets Stumble as Fed Rate Expectations Rattle Tech Sector

The tech-heavy slump mirrors a broader reassessment of AI infrastructure spending. Companies including Alphabet, Meta Platforms, and Microsoft faced heavy selling pressure, while SpaceX struggled to regain footing following a 17% decline on Monday. In Asia, Seoul’s KOSPI index suffered its steepest single-day drop since March, plummeting 10%. David Morrison, senior market analyst at Trade Nation, noted that questions are mounting regarding the sustainability of corporate expansion plans funded by equity sales.

Simultaneously, the U.S. dollar climbed to one-year highs, exerting immense pressure on major currencies. The Japanese yen hovered near 40-year lows at 161.58 against the dollar, prompting Finance Minister Satsuki Katayama to hold emergency discussions with U.S. Treasury Secretary Scott Bessent regarding potential intervention. The euro similarly dipped below $1.14. Bond markets reflect this shifting landscape; 2-year Treasury yields, highly sensitive to Fed policy, remain near 16-month highs at 4.20%. With money markets pricing in a September rate hike, commodities faced a broad selloff, with gold falling to $4,120 an ounce and bitcoin retreating to $62,500.