Asian markets sell off as AI trades crumble after hot US CPI data

Asian equity markets opened lower on Thursday, with an MSCI index covering Asia-Pacific shares outside Japan falling 1.2%. South Korea's KOSPI led the decline with a 5.6% slide, while Japan's Nikkei 225 dropped 1.3%. Business Recorder reported that the moves followed a faster-than-expected rise in US consumer price inflation, which raised bets on a Federal Reserve rate increase later this year.

Overnight, Wall Street extended its losses to a third session, with the Nasdaq Composite down 1.9% and semiconductor stocks falling for a sixth straight day. Oracle and CoreWeave were among the AI-linked names under pressure, as higher rates threatened their borrowing costs. JPMorgan analysts attributed most of the decline to technology names after the first reaction to the inflation figures, while financing risks remained central to the AI story.

Traders now price a 31.6% chance of a 25-basis-point Fed hike at the October 28 meeting, up from 22.1% a day earlier, as tracked by the CME Group's FedWatch tool. Attention now shifts to remarks from Fed officials in Bangkok, including Chair Kevin Warsh, plus US producer price and retail sales figures scheduled for later today. TSMC, a major chipmaker, reports third-quarter earnings later in the Asian session.