CoreWeave Shares Plunge 15% as AI Data-Centre Rout Deepens

Summary

CoreWeave shares plunged 15% and fell further after hours, wiping out a fifth of its value, as the data-centre operator’s 2032 bond yields topped 15%. South Korea’s KOSPI has slid over 15% this week, triggering a circuit breaker. Treasuries rallied as investors sought safety, despite hotter-than-expected US CPI. ASML said customers were already looking to place orders for 2029 and 2030, easing fears of an AI slowdown.

Equities

The FTSE 100 closed 0.7% higher at 10,724.86 on Wednesday, while the FTSE 250 edged up 0.1%. A weaker pound after hotter-than-expected US inflation data lifted export-heavy healthcare and consumer staples stocks.

AstraZeneca and GSK each rose more than 3.4% on Wednesday, while Unilever gained 2.5%. Burberry climbed 3.5%, putting it among the FTSE 100’s top gainers.

Housebuilders advanced 3.2% on Wednesday after Bank of England chief economist Huw Pill said he was sceptical of market expectations for four rate rises over the next year. Precious metal miners fell 3.5% on weaker gold and silver prices, and banks slipped 0.6%.

Big Yellow rose 5.4% on Wednesday after activist investor Ancora called for a strategic review of the self-storage group and said it could attract takeover interest. Softcat dropped 10.7% to its lowest level since 29 May, finishing bottom of the FTSE 250, after the IT firm flagged a slower growth outlook for 2027.

The S&P 500 fell 1.11% to 7,718.94 on Wednesday, its biggest one-day drop since 29 July, after September consumer prices rose more than expected. The Nasdaq lost 1.88% to 26,692.87, while the Dow Jones Industrial Average slipped 0.09% to 51,621.48. Traders now see a 37% chance of a Federal Reserve rate rise this month, up from 22% on Tuesday.

AI stocks sensitive to borrowing costs fell sharply on Wednesday. CoreWeave tumbled 15%, Nebius lost 10% and Oracle fell 8.8%, while Dell sank 11.4% and Hewlett Packard Enterprise dropped 8.2% after Barclays downgraded both to equal-weight from overweight.

The Philadelphia semiconductor index fell 4.3% on Wednesday, its sixth straight decline and longest losing run since May 2025. Apple bucked the trend, rising 0.5% to close with a market value above $5trn for the first time.

Bank of America fell 4.8% on Wednesday after third-quarter profit dropped as it set aside $1.2bn for regulatory fines over failures to detect potential money laundering. Morgan Stanley lost almost 3% despite higher quarterly profit. Bending Spoons surged 41% after Berkshire Hathaway invested a further $330m in the owner of Vimeo and AOL.

Forex & Commodities

The US dollar was down early this morning at 102.0 against a basket of currencies, retreating from an 18-month high reached late on Wednesday as Treasury yields fell. The euro was up at $1.122 and the British pound rose to $1.325, recovering from a 13-month low. Against the yen, the dollar was down at 157.7, while the Australian dollar fell to $0.6952 after a surprise drop in employment in September and the New Zealand dollar rose to $0.5626.

US consumer prices rose faster than expected in September, driven by a surge in gasoline costs. Pricing for an October Fed hike briefly jumped to 50% after the figures, before San Francisco Fed President Mary Daly and Vice Chair for Supervision Michelle Bowman indicated the central bank could wait for a clearer picture ahead of its October 27 to 28 meeting. US producer price and retail sales data are due later today, and Fed Chair Kevin Warsh speaks in Bangkok on Friday.

The UK economy grew by 0.1% in August, beating forecasts, while Bank of England Chief Economist Huw Pill said a rate rise need not be the start of a long series of increases. The US 10-year Treasury yield fell to 5.093% overnight, a three-week low.

Spot gold rose 1% early this morning to $4,147 an ounce, rebounding from a one-week low hit on Wednesday as the dollar slipped. Traders were pricing a 29% chance of a Fed rate hike this month, up from 22% before the inflation data. Silver was up at $56.01, platinum rose to $1,608 and palladium climbed to $1,108.

Oil prices fell early this morning as the US considered easing sanctions on shadow-fleet vessels to lower shipping costs. Brent crude was down at $104.4 a barrel, while WTI fell to $94.11, reversing Wednesday’s gains.

A container ship and a dry bulk carrier sank near the Strait of Hormuz after being hit by projectiles in separate incidents. US crude stocks fell by 11.1 million barrels in the week to October 9, a much larger draw than expected, with official figures due later today.

Economic Calendar

•      US retail sales

•      US PPI

•      UK monthly GDP

•      TSMC Q3 earnings

•      IMF and World Bank annual meetings continue in Bangkok