The Nikkei Stock Average plummeted 5.0%, marking its steepest daily percentage decline since March, while South Korea’s Kospi index suffered a 9.1% drop as chip giants Samsung Electronics and SK Hynix each tumbled more than 10%. Investors are increasingly wary of companies that have aggressively borrowed to finance data center expansions. With U.S. inflation figures exceeding expectations, the prospect of sustained high interest rates threatens to inflate borrowing costs, potentially destabilizing the heavy infrastructure spending currently driving the AI sector.

Takahide Kiuchi, an economist at Nomura Research Institute, noted that capital expenditure by top hyperscalers is projected to outpace operating cash flow by 2026. This dependency on external financing leaves the industry vulnerable to tightening credit conditions. As equity appetite waned, capital flowed into traditional safe havens; the 10-year Japanese government bond yield fell 7.2 basis points to 2.925%. Saxo Markets strategist Charu Chanana observed that the market is witnessing a return of traditional hedges—such as the yen and Swiss franc—that had largely been ignored during the recent rally. Meanwhile, oil futures faced downward pressure, with Brent crude dipping 1.7% to $104.22 a barrel as regional trade sentiment remained fragile.