Start the day with Reuters on the stories moving U.S. and global markets. Subscribe for $1/week.

Morning Bid U.S.

A Reuters Open Interest newsletter

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance & Markets

The chip stock correction snowballed again overnight amid growing concerns about rising competition and circular financing.

This comes ahead of a set of critical earnings reports from tech companies on Wall Street and in Asia - and it comes despite a further slump in oil prices below $90 per barrel amid the tense pause in the Iran conflict.

I'll get into that and more below.

But first, check out my latest column, where I outline the many inflationary drivers that central banks may increasingly struggle to "see through".

And listen to the latest episode of the Morning Bid daily podcast, where we discuss the many causes of the latest chip selloff.

Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

Data refreshes every time you open this email. For more U.S. market news, click here. Please send any feedback to morningbid@thomsonreuters.com.

Today's Market Minute

Asian semiconductor stocks tumbled on Tuesday, with South Korea leading the regional selloff, as investors questioned lofty valuations amid concerns over AI infrastructure financing and intensifying competition from China.
As China's CXMT becomes the world's fourth-biggest memory chipmaker, check out this detailed Reuters report on how it's been flexing its newfound pricing power in China.
China has begun mass producing domestically developed immersion deep-ultraviolet (DUV) lithography machines, a technology crucial to advanced chipmaking, marking a key step forward in Beijing's drive to ‌reduce its reliance on foreign technologies.
The Federal Reserve will almost certainly have to raise rates if it wants to get inflation back down to target - but that doesn't mean it will, creating a threat to its credibility, writes ROI Markets Columnist Jamie McGeever.
A wave of "fast money" may be behind a series of seemingly irrational price swings in recent years, suggesting chip stock weakness could be just beginning, argues Panmure Liberum's Joachim Klement.

Chip rout snowballs

Stock markets remained on edge on Monday and heading into Tuesday due to a host of catalysts. One was a sharp drop in shares of U.S. chip giant Nvidia - partly on reports of another round of circular financing with OpenAI.

Another possible trigger was the blowout IPO of China's CXMT on Monday - a first-day jump of nearly 470% that unveiled a new chip giant ready to soak up investment funds.

Meanwhile, reports that Chinese firms are developing chipmaking technology that apes ASML's dominant offering sent the European tech giant's shares down sharply on Monday.

U.S.-listed shares of South Korea's SK Hynix fell back below their recent debut price on Monday, ahead of its quarterly update tomorrow, while Seoul's volatile KOSPI index plummeted nearly 11% on Tuesday to post its biggest daily loss in nearly five months. Rival chipmaker Samsung Electronics, which is also down sharply, is likewise set to report this week.

Both companies' earnings are coming amid reports of heavy capex by hyperscalers to build out their AI infrastructure. The size of that spending, and the cash burn that goes with it, look to be the big theme of the hyperscaler earnings season. Credit markets are watching warily.

On the energy front, oil slid further heading into Tuesday to around $86 per barrel. U.S. President Donald Trump said on Monday that the U.S. was having "good talks" with Iran and that a deal was possible but reiterated familiar warnings that strikes would resume if negotiations go nowhere.

Those energy price gyrations will no doubt be a point of discussion at the Federal Reserve's two-day policy meeting, which starts today.

Despite the latest oil price retreat, futures markets still see the Fed gathering as a "live" one, with a one-in-three chance of a rate hike priced in. An increase in rates by September is now seen as essentially a certainty in markets.

With that, onto today's column.

Central banks can't 'see through' this many inflationary risks

Central banks often argue that price shocks come and go in different sectors without durably affecting the overall national inflation picture - and they are often proven correct.

But when half a dozen price pressures appear at the same time, it's difficult to make the case to either the public or financial markets that the cumulative effect will be transitory.