Tokyo: Global financial markets witnessed a widespread sell-off on Wednesday, as investors turned increasingly anxious over soaring valuations and the growing possibility of a correction. The rout began on Wall Street, where technology-heavy indices plunged, and swiftly rippled across Asian and European markets, dragging down stocks, currencies, and commodities.
Asian markets bore the brunt of the global downturn. Japan’s Nikkei index fell nearly 4.5 percent, marking one of its steepest single day declines this year, just a day after reaching record highs. The downturn in Tokyo was largely triggered by a sharp drop in U.S. tech shares, with SoftBank Group a major investor in Silicon Valley firms losing nearly 10 percent in early trading.
South Korea’s stock market also suffered heavily, tumbling over 6 percent, while Hong Kong’s Hang Seng index dropped more than 3 percent amid mounting fears that the recent surge in valuations was unsustainable. Across the region, MSCI’s Asia-Pacific index excluding Japan slumped 2.3 percent, its worst performance since April.
The trigger for Wednesday’s sell-off stemmed from Wall Street, where U.S. technology stocks—once the driving force behind global gains faced heavy selling pressure. The Nasdaq Composite fell roughly 2 percent, erasing billions in market value as investors began questioning whether the artificial intelligence (AI) boom that fueled recent rallies had overheated.
Market strategists warned that valuations have reached levels reminiscent of the dot-com bubble of the late 1990s. “Those with money on the line aren’t looking for explanations right now they’re following the crowd. And the answer is to run,” said Matt Simpson of StoneX, describing the panic-driven market sentiment.
Even top Wall Street executives have expressed concern. Leaders from Morgan Stanley and Goldman Sachs cautioned that global stock prices may have climbed too far, too fast, especially in sectors tied to AI, fintech, and semiconductors.
In mainland China, the CSI300 index slipped 0.6 percent, pressured by weak economic data showing that private-sector service activity expanded at its slowest pace in three months. The data added to worries about China’s uneven post-pandemic recovery and weak domestic demand, further dragging on regional sentiment.
Meanwhile, Hong Kong-listed tech firms mirrored their U.S. counterparts, with heavy losses across major Chinese internet and chip manufacturing companies. Investors are increasingly shifting funds to safer assets amid signs that global economic growth is slowing.
Currency markets were not spared from the turbulence. The U.S. dollar weakened 0.3 percent against the Japanese yen, trading around ¥153.16, as investors sought refuge in the safe-haven currency. The dollar index, which tracks the greenback against a basket of major currencies, slipped from a five-month high of 100.25.
U.S. Treasury yields also edged lower, with the benchmark 10-year note easing to 4.058 percent from 4.091 percent a day earlier. The fall in yields reflected increased demand for government bonds as risk-averse investors moved away from equities.
The commodity and cryptocurrency markets mirrored the volatility seen in equities. Bitcoin briefly slipped below the $100,000 mark for the first time since June, before recovering slightly to trade near $101,200. Gold, after three consecutive sessions of decline, rebounded modestly to $3,938.54 per ounce, as traders sought safety in the precious metal.
In energy markets, Brent crude oil fell 0.6 percent to $64.05 per barrel, weighed down by concerns over global demand and growing stockpiles. The euro hovered around $1.1487, stabilizing after touching a three-month low against the dollar earlier in the week.
Market analysts say the sharp correction could extend in the near term, given the absence of clear catalysts for recovery. “There aren’t many reasons to buy here,” said Chris Weston of Pepperstone Group. “Until we get closer to major corporate results like Nvidia’s earnings later this month, markets are likely to drift lower amid profit-taking.”
The ongoing slide reflects broader uncertainty across global markets rooted in stretched valuations, mixed economic data, and investor fatigue after months of relentless optimism. While some analysts view the correction as a healthy adjustment, others fear it may signal the beginning of a deeper downturn if confidence continues to erode.