Stocks and commodities lost further ground on Monday. Equities, oil and precious metals plunged on Monday morning to extend the volatility that struck markets at the end of last week, with concerns about elevated tech valuations once again casting a shadow. Investors resumed Friday’s rollercoaster ride on trading floors, as they assessed geopolitical developments, the latest batch of earnings from market heavyweights and the prospect for US interest rate cuts.
The South African rand also lost significant ground after itsfour-year high of $15.66 against the US dollar last week, plunging to a low of $16.30 on Monday morning before recovering to the R16.12 mark by mid-morning. After a strong start to the year, fuelled by fresh hopes for artificial intelligence, stocks went into reverse last week as traders again questioned the wisdom of the vast sums of cash pumped into the sector and worries about when they will see returns. That has also raised fears of a tech bubble that could soon pop after a surge to record highs last year.
The latest round of selling came after Microsoft announced a surge in spending on AI infrastructure, which revived concerns that companies could take some time before seeing a return on their investments. Seoul, which has hit multiple records this year thanks to its big tech weighting, plunged more than five percent, with chip giant SK hynix shedding eight percent and market heavyweight Samsung off more than five percent. Tokyo, also home to several big-name tech firms, shed more than one percent, while Taipei —where chip giant TSMC is listed — lost more than two percent.
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Hong Kong, Shanghai, Sydney, Singapore, Wellington, Manila and Bangkok also tumbled. Jakarta tanked more than five percent, extending last week’s rout after index compiler MSCI called on regulators to look into ownership concerns and a warning it would hold off adding Indonesian stocks to its indexes or increasing their weighting. There are concerns it could announce a downgrade from emerging market to frontier market, which could spark an outflow of foreign capital.
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