A significant selloff in technology stocks has negatively impacted global equity markets and caused the dollar to decline. This turbulence, observed on Thursday, was driven by concerns surrounding high and rising interest rates affecting investments in data centers and artificial intelligence.

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Despite European markets providing a brief reprieve, Nasdaq futures indicated a drop of over 1%. The Nasdaq and S&P 500 had already experienced their largest one-day decline since July on Wednesday, following US inflation data that exceeded expectations, raising fears of further Federal Reserve interest rate increases.

Adding to the negative sentiment, Taiwan Semiconductor Manufacturing Company (TSMC), the leading manufacturer of high-tech chips, reported record profits but cautioned about "macroeconomic uncertainties." AI lab Anthropic did report a 45% increase in third-quarter revenue compared to the previous quarter but failed to uplift market spirits.

CoreWeave, a heavily indebted data-center operator central to recent AI investments, fell 6.3% in premarket trading following a 15% drop the previous day. Meanwhile, Oracle’s shares decreased by 2.1% after a nearly 9% decline.

The dollar has also weakened, deviating from its usual patterns as analysts noted that a major equity selloff could shift currency dynamics. Michael Metcalfe, State Street’s head of global macro strategy, remarked that the Federal Reserve’s interest rate hikes had previously bolstered the dollar, but severe equity losses could reverse this trend. He highlighted that foreign investor hedge ratios on US positions had dropped to below 15%, down from around 25% in April.

In Asia, the overnight market performance was challenging. South Korea's KOSPI index, heavily influenced by major chipmakers benefiting from AI enthusiasm, fell nearly 8% for its seventh consecutive drop. The Nikkei 225 also declined 5%, marking a sixth straight loss. TSMC’s shares fell 2% despite its record profits, while Samsung Electronics dropped nearly 10%, and memory chipmakers SK Hynix and Kioxia Holdings saw declines exceeding 11% each. The cost of insuring AI-linked tech companies against default has risen significantly, with credit default swaps for firms like Oracle and SoftBank widening to near-record levels.