Global financial markets suffered a sharp blow today as investors reacted to renewed fears over technology spending, artificial intelligence investments, and broader economic uncertainty. A massive $67 billion was wiped off the share market, representing a 2.2% decline, marking the worst trading day since April, when former U.S. President Donald Trump rattled global markets with aggressive tariff threats.
The selloff was broad and unforgiving. Every major sector closed in the red, and almost every stock on the ASX declined, highlighting the depth of investor anxiety. Technology, travel, and uranium stocks were among the hardest hit, reflecting global risk aversion and concerns over future demand.
One notable exception was Rio Tinto, which finished flat after confirming it had abandoned $300 billion merger talks with Glencore. While the decision removed uncertainty surrounding the potential mega-merger, it left both mining giants in an awkward strategic position, with investors unsure of their next moves in a volatile commodities environment.
US Tech Selloff Sparks Global Panic
The negativity in local markets was largely driven by developments in the United States, where a major tech selloff intensified overnight. The most dramatic move came from Amazon, whose shares plunged 11% in after-hours trading. The drop followed the company’s announcement that it plans to spend a staggering $200 billion US on data centers and microchips.
While the investment is aimed at strengthening Amazon’s artificial intelligence capabilities, investors are increasingly questioning whether such massive spending will generate meaningful returns. Once again, concerns have surfaced that the AI boom may be creating inflated expectations without guaranteed profitability.
These fears spilled over into global markets, sending Wall Street sharply lower and dragging down equities in Britain, Hong Kong, and South Korea. Japan, however, managed to hold up relatively well, supported by domestic factors and a weaker yen that benefited exporters.
Commodities Tell a Mixed Story
Commodity markets offered a more nuanced picture. Iron ore prices continued to slide, weighing on mining stocks and resource-heavy indices. However, there was a notable rebound in gold, silver, and oil, as some investors stepped in to “buy the dip.”
Gold’s recovery reinforced its long-standing reputation as a safe-haven asset during periods of market stress. As equities fell and volatility rose, traders sought refuge in precious metals, underscoring gold’s resilience compared to more speculative assets.
Oil prices also rebounded, helped by bargain hunting and expectations that global demand may remain stronger than feared despite slowing growth in some regions.
Currency Markets Reflect Risk Aversion
In currency markets, the Australian dollar slipped to 69.12 US cents, reflecting both the global risk-off mood and falling commodity prices. A stronger US dollar and concerns about China’s economic outlook further pressured the Aussie, which is often seen as a proxy for global growth sentiment.
Crypto Investors Face a Brutal Reality Check
While equity investors had a rough day, cryptocurrency holders arguably suffered the most severe losses. At one stage, Bitcoin crashed to nearly $60,000 US, marking a dramatic fall of almost 50% from its record high reached in October.
This decline has occurred despite the presence of a crypto-friendly US president, raising serious doubts about Bitcoin’s narrative as “digital gold.” In contrast to Bitcoin’s sharp fall, real gold has held its value and even rebounded, highlighting the difference between speculative assets and traditional stores of value during market turmoil.
The performance has also challenged the idea that Bitcoin is a reliable hedge against inflation or financial instability. In fact, investors would have achieved better returns by doing nothing at all, as Bitcoin’s volatility erased months of gains in a short period.
AI Spending: Promise or Problem?
A central theme driving today’s selloff is growing skepticism around artificial intelligence investment. While AI is widely seen as transformative, the sheer scale of capital being deployed by major tech companies has raised alarms.
Investors are now asking difficult questions:
- Will AI generate sustainable profits?
- Are companies overspending to avoid being left behind?
- Is the market overestimating near-term returns?
Until clearer answers emerge, markets are likely to remain volatile, with tech stocks particularly vulnerable to sharp corrections.
Outlook: Volatility Likely to Continue
With global markets on edge, investors are bracing for continued turbulence. Key factors to watch include upcoming corporate earnings, inflation data, central bank commentary, and geopolitical developments. Any indication that AI spending is slowing—or that profits are failing to materialize—could trigger further downside.
For now, caution dominates sentiment. Today’s selloff serves as a stark reminder that markets remain highly sensitive to shifts in expectations, especially when optimism runs ahead of fundamentals.