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Morning Edition · Thursday, October 15, 2026Published at 1:13 AM EDT · New York
Hot US inflation revives Fed rate-hike bets and South Korea's Kospi falls 8%
Japan's Nikkei 225 fell almost 5% by the midday break, following a Wall Street sell-off in chip stocks. The sell-off began after US consumer prices for September rose 3.7% from a year earlier, slightly above forecasts.
Asian chip stocks fell sharply on Thursday after a sell-off that began on Wall Street when the US Bureau of Labor Statistics published inflation figures above forecasts. In September the consumer price index (CPI) rose 0.6% from August and 3.7% from a year earlier. Economists had expected 3.6%. Core prices, which exclude food and energy, rose 2.6% from a year earlier against a forecast of 2.5%. Gasoline prices rose 9.1% for the month and accounted for half of the overall increase.
In New York the Nasdaq Composite fell 1.88% to 26,692.87, and the S&P 500 lost about 1%. A benchmark index of semiconductor stocks fell 4.3%, leaving it about 12% lower over the past week. CNN reported that the inflation data made investors more confident the Federal Reserve will raise rates again. The Fed raised its target range to 3.75%-4% on September 16, its first increase in three years, and its own projections point to one more increase this year.
Asian markets fell further still. The Financial Times reported that the losses triggered a trading halt on South Korea's Kospi and that the Nikkei 225 dropped about 5%. Korean data published by Business Today put the Kospi down 8.13%, at 5,515.76, in early afternoon, after a circuit breaker stopped trading for 20 minutes. SK hynix was down 11.35% and Samsung Electronics 10.13%. In Tokyo, Japanese reporting carried by Media-IR put the Nikkei 225 at 64,489.06 at the midday break, down 3,255 points, or 4.81%, the sixth straight losing session. Advantest, SoftBank Group and Tokyo Electron accounted for more than 1,400 points of the decline. Euronews said European markets were expected to open lower.
Higher interest rates are only part of the explanation. Earlier in the week, the Chinese memory maker CXMT said it had made progress on a denser memory-chip design, which raised concern about competition for US and Korean producers. Brazil's Folha linked the Asian selling to both US inflation and doubts about future AI earnings. Investors are also scrutinizing the major AI developers more closely: MarketWatch reported that Anthropic's revenue growth appears to be slowing as the company prepares to list its shares.
Part of a tracked trend
Renewed Fed Tightening Fears Rattle Global Markets
Over the next 3-6 months stronger US data revives expectations of Fed rate hikes, driving a firmer dollar, equity selloffs in export-heavy markets, and pressure on hard assets as the IMF warns of recurring economic shocks.
What this means
Higher rate expectations reduce the present value of companies whose earnings are expected far in the future. AI hardware is the most exposed corner of the market: Korean and Japanese indexes depend heavily on memory makers and chip-equipment suppliers, so they fell further than New York did. Markets had already priced in a Fed rate increase. What changed is that a higher-than-expected September reading makes a second increase more likely, and AI spending plans now face higher capital costs and a Chinese memory-chip competitor at the same time. The common reading treats this as a Fed-driven sell-off, but core inflation was 2.6% and gasoline caused half of September's rise. The Fed is tightening in response to an energy-driven price shock that higher rates cannot fix. In the Austrian economic view, this exposes the weakness of spending financed by cheap credit. The closest precedent is 1999 and 2000, when the Fed raised rates into a technology spending boom and hardware makers fell first. Our forward read: if Brent crude stays above $100, the Fed is likely to deliver the extra increase shown in its projections, and chip and AI-infrastructure stocks are likely to stay under pressure for weeks as credit for data-center projects gets more expensive. A clear drop in oil and gasoline prices, possibly from the sanctions relief Washington is considering, would prove this wrong by removing the energy component from the next inflation report.
What to watch
- Statements from Federal Reserve officials before the next policy meeting. If they describe September's energy-driven rise as temporary, that would suggest markets are pricing in too many rate increases.
- Whether Korean regulators or the national pension fund intervene to support the Kospi. Intervention would indicate Seoul treats the chip sell-off as a risk to financial stability.
- Pricing and disclosed revenue in Anthropic's planned share listing, the clearest public test of whether AI developers' income can support the hardware spending built on top of it.
Synthesized from: Financial Times Markets · Euronews · Folha (Mercado) · MarketWatch
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Comments
1Oct 15, 5:13 AM
Gasoline supplied about 0.3 points of the 0.6% monthly rise, so prices excluding gasoline rose roughly 0.3%, which leaves core inflation at 2.6% as the figure most likely to set the Fed path.