On Tuesday, U.S. chip stocks came under pressure again due to the poor performance of a new South Korean cloud computing company on its first day of trading, which dampened market sentiment.
Cloud infrastructure company Elice is regarded as the largest listing project in South Korea on the KOSDAQ index this year, yet its stock price plummeted by 32% on its first day of trading. This also dragged down several other well-known South Korean tech stocks, including Samsung and SK Hynix, with the benchmark KOSPI index closing down 4% on that day.
The strong negative sentiment surrounding this company, which plays a key role in the AI trading process, spread to the U.S. market after the opening of trading on Wall Street, causing a decline in major chip and storage stocks.
The following are the percentage declines of some of the main stocks in this sector:
- Cerebras Systems: Down 4%
- NVIDIA: Down 2%
- Micron Technology: Down 2.5%
- SanDisk: Down 3%
- Intel: Down 3.5%
- Supermicro Semiconductor ( AMD ): Down 2.4%
Meanwhile, on Tuesday, the oil market experienced fluctuations again. Affected by concerns in the market that Saudi Arabian shipping and production facilities might be attacked, Brent crude oil rose to $111 per barrel, reaching its highest level in five months.
However, the rise in crude oil prices did not drive up yields on 10-year U.S. Treasury bonds again. On the contrary, a series of weak real estate data this week pushed yields down. The data showed that new home starts in September were modest; data released the previous day indicated that confidence among U.S. home builders had fallen to its lowest level in 14 years.
Fluctuations in South Korea's tech sector are being transmitted to the U.S. market, a theme that has become familiar to investors this year. A similar sell-off occurred last week, when the market was concerned that well-known South Korean chip companies were facing threats from Chinese competitors.
TradeNation Senior Market Analyst David Morrison stated that this development indicates that investors' concerns regarding AI related companies remain high. He also mentioned that Firmus, an Australian data center group supported by NVIDIA, has recently canceled its $5 billion IPO plan.
He said, "If we look at the trading charts of individual stocks in the US chip sector this morning, which also include AI related stocks, we can see that this round of selling that began at the beginning of this month—In some cases, it can even be traced back to late September—may not have ended yet."
