Plunging investor confidence in artificial intelligence has triggered cross-asset anxiety that extends well beyond equity valuations into corporate debt markets. Surging volatility indices and escalating credit default protection costs are prompting institutions to reassess risk exposures across the tech landscape. Capital has aggressively rotated into defensive positions, highlighted by a massive $140 billion weekly inflow into cash funds. However, broader fixed-income markets remain orderly for now, with the Treasury-tracking MOVE index retreating from its October peak.
Key points
Growing doubts regarding artificial intelligence valuations are driving substantial risk…: Growing doubts regarding artificial intelligence valuations are driving substantial risk repricing across equity and corporate debt markets.
Yields on riskier U.S. junk debt, particularly CCC-rated issues, have spiked to multi-yea…: Yields on riskier U.S. junk debt, particularly CCC-rated issues, have spiked to multi-year highs amid climbing corporate default concerns.
Broader systemic stress remains contained for the moment as U.S. swap spreads hold steady…: Broader systemic stress remains contained for the moment as U.S. swap spreads hold steady and the MOVE index eases.
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LONDON, Nov 6 : A rout in technology stocks as confidence in the AI trade falters could test the resilience of global financial markets from New York to Taipei.
The tech-heavy Nasdaq 100 rose nearly 2 per cent on Friday, clawing back some of Thursday's more than 6 per cent plunge - but traders remain on edge.
Policymakers have long warned of the risks from an AI boom unraveling. Investors and regulators are keeping a close watch on market stress indicators, with some flashing amber, although not yet red.
Here's a look at how key measures are faring:
FEAR IS UP
Wall Street's fear gauge, the VIX index of US stock market volatility, rose to over 28 on Thursday, its highest since late March. It was holding close to that level on Friday.
The increase is relatively contained compared to the post-April 2025 "Liberation Day" market jump and the August 2024 market selloff.
Still, the VIX has surged more than 40 per cent this week.
The European equivalent hit its highest level since May on Friday.
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