Key Takeaways:
A global selloff in semiconductor stocks pushed Nasdaq 100 futures toward a technical test of their 50-day moving average, with traders awaiting the US trade balance report for the next directional cue.
Nasdaq 100 futures fell in overnight trading after a global rout in semiconductor stocks deepened, threatening the index's 50-day moving average as investors questioned the sustainability of hyperscale AI spending.
"The chip trade is repricing in real time as investors weigh whether AI infrastructure investment can maintain its current pace," said Sarah Lin, US equity strategist at Edgen. "The 50-day MA is the level momentum traders are watching most closely."
The selloff swept across the semiconductor supply chain. South Korea's KOSPI tumbled 5% last week, with Samsung Electronics falling 7.5% and SK Hynix losing 9.2%, according to exchange data. Japan's Nikkei 225 slid 1.6%, while Kioxia Holdings plunged 13.3% and Ibiden dropped 7.9%. In the US, Micron Technology and SanDisk each fell more than 10% before staging a partial recovery. The Cboe Volatility Index rose to its highest level in three weeks as declining issues outnumbered advancing ones by a 3-to-1 ratio on the Nasdaq.
A breach of the 50-day MA would mark the Nasdaq 100's first close below that level since April, potentially triggering further selling from algorithmic and trend-following strategies. The US trade balance report, due at 8:30 a.m. New York time, could either stem the selling or accelerate it depending on the data. Samsung Electronics is scheduled to report preliminary second-quarter results on Tuesday, which may provide the next catalyst for the memory-chip trade.
The selloff was triggered by reports that Meta Platforms is exploring a cloud infrastructure business to sell excess AI computing capacity, raising concerns that hyperscale companies may become more disciplined with AI capital expenditure. Separate reports that Apple is evaluating memory chips from Chinese supplier ChangXin Memory Technologies added pressure on South Korean memory producers, which have been key beneficiaries of the AI-driven chip cycle.
The weakness extended beyond Asia. Taiwan Semiconductor Manufacturing Co. extended recent losses as investors reassessed elevated valuations following this year's rally. European semiconductor stocks also declined in sympathy, with ASML Holding and Infineon Technologies each falling more than 2%.
The US 10-year Treasury yield edged lower by 3 basis points to 4.47%, while the dollar index held near 100.7, providing little relief for risk assets. Gold slipped 0.5% to $4,146 an ounce as the selloff prompted a broad deleveraging across asset classes.
Traders are now watching the 50-day MA as a critical technical threshold. The level has acted as support on four occasions since March, and a clean break below it could open the door to the 100-day MA near 21,200. Conversely, a bounce from the level would reinforce the uptrend that has carried the Nasdaq 100 up 18% this year.
This article is for informational purposes only and does not constitute investment advice.
